Strong U.S. corporate transient and group business toward
the latter half of 2017 gave Hilton's fourth-quarter and full-year results a
boost heading into 2018, the company reported on Wednesday.
Revenue per available room rose 3.8 percent year-over-year
systemwide and 3.2 percent in the U.S. Hilton president CEO Chris Nassetta said
the company is seeing particular strength in the corporate meetings segment, as
80 percent of its group meetings business is "already on the books"
for 2018.
Keep reading below the jump.
Typically, Nassetta told analysts, corporate group business
lags corporate transient demand. In the current cycle, however, growth in
corporate group is slightly leading corporate transient, which has been "a
bit choppier." Nassetta said the shift could be a result of the industry's
continued high occupancy levels and realizations among procurement
professionals that "if they don't get ahead of it, they're not going to
have their meetings."
The new tax reform bill and the current economic climate,
too, have given the industry reason to be more optimistic about corporate
transient business in 2018. "If
the economy is really doing what we think ... that will lead to a better result
than what we got in business transient last year," Nassetta said.
Just prior to the 2018 corporate rate negotiation season,
Hilton announced a systemwide 48-hour cancellation policy. When questioned
about how that policy impacted conversations with corporate buyers, Nassetta
said: "We did have a little kickback
on that but not material. When I talked to our sales team, they said that it
came up, a few people groused about it, but when you explained why we were
doing it, I think people understood it and dealt with it."
Hilton Honors Growth
The company's
loyalty program, Hilton Honors, added 11 million members in 2017, bringing its
membership to 71 million at the end of the year. Nassetta said Hilton is
looking to allow members to receive bonus points for night stays beyond a
certain threshold, gift elite status to another member and roll nights over from
year to year.
Hilton properties that
offer Digital Key capabilities through the Hilton Honors app number more than,
2,500 hotels, adding up to 350,000 rooms, globally. Hundreds more properties
are expected to be added this year. The company also is preparing to scale its
new Connected Room, which allows guests to control aspects like temperature,
lighting and TVs from the app.
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Development & Additional Results
Nassetta said Hilton
opened more than one hotel per day in 2017. At year-end, Hilton's development
pipeline totaled 2,257 hotels, or 345,000 rooms, across 107 countries and
territories. More than half the rooms in that pipeline are outside the U.S.
Hilton's
fourth-quarter net income was $841 million, following a $387 million loss in
2016 that resulted from the spin-off of Park Hotels & Resorts and Hilton
Grand Vacations. Full-year net income totaled $1.3 billion, up from $364
million in 2016.
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