Hilton reported strength in corporate transient demand during the second quarter, a trend president and CEO Christopher Nassetta said has carried over from the start of 2018 and should continue on in the remainder of the year.
Revenue per available room for the corporate transient segment increased 3 percent year over year in the quarter. Group RevPAR "meaningfully outpaced" expectations, according to Nassetta, growing by "high single-digits." He expects group to outperform the corporate and leisure transient segments during the third and fourth quarters.
Systemwide occupancy rose 1.3 percentage points to 79.5 percent, and average daily rate increased 2.3 percent to $150.76. U.S. RevPAR grew 3.5 percent, benefiting from strong meetings and convention business, as well as an 8 percent increase over last year in international inbound travel, particularly from Europe, China and Canada. In Europe, Hilton's RevPAR rose 6.5 percent, besting the 4.9 percent STR reported for all hotels in the region. Nassetta attributed the strength to gaining market share in the region.
Hilton opened 17,100 rooms during the quarter and increased its net unit growth by 18 percent year over year to 15,800 rooms. It approved 28,800 rooms for development, bringing its pipeline to 362,000 as of June 30, a 9 percent year-over-year increase.
Second-quarter net income increased 44 percent year over year to $217 million. During the quarter, the company repurchased 18.5 million shares of Hilton common stock for an aggregate cost of $1.3 billion. Those repurchases came largely from HNA's and Blackstone's full divestitures of their investments in Hilton.
Looking ahead, Hilton maintained its RevPAR guidance of 3 percent to 4 percent for the full year 2018. The shift of the July 4 holiday to a Wednesday is expected to negatively impact third-quarter results.
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