Hilton Worldwide and Hyatt Hotels Corp. on Wednesday announced steady fourth-quarter and year-end growth in group and transient travel segments, particularly in the Americas.
"Much like last quarter, we continue to see strong and balanced growth in both transient and group demand," Hilton CEO and president Christopher Nassetta said of fourth-quarter results in a conference call to investors. "We remain very positive on group business going forward in 2015."
Hilton's fourth-quarter occupancy was 71 percent, up 2.3 percent from the same period last year, and its companywide average daily rate was $140.63, up 3.1 percent. For 2014 overall, occupancy was 74.6 percent, up 2.4 percent from 2013, and ADR was $141.52, up 3.7 percent. Hilton's fourth-quarter net income improved significantly to $158 million from $26 million. The company's annual net income was $673 million, up from $415 million.
Year-over-year group revenue at owned and managed hotels in the Americas improved 8 percent in the fourth quarter, and nearly 7 percent for the year.
Hilton executive vice president and CFO Kevin Jacobs attributed strong rate gains in the United States to "robust" transient and group demand, particularly in the San Francisco, Chicago and Los Angeles markets, where group revenue increased between 15 and 25 percent for the quarter.
Nassetta said transient revenue grew nearly 7 percent at comparable, systemwide hotels in the fourth quarter, driven by best-available-rate growth of 9 percent and corporate negotiated growth of 8 percent. Transient revenue for the year grew 7 percent.
Meanwhile, when asked by an analyst whether Hilton's corporate clients were pushing for more perks during rate negotiations in light of Hyatt's move to offer free Wi-Fi access, Nassetta said "I think it's becoming more of a seller's market than a buyer's market, so I think we are doing less of that, not more of that."
Referring to the moves by Marriott International and Starwood Hotels & Resorts to offer free Internet to travelers who book through their websites and mobile channels, Nassetta said that "I think some of the things you're seeing people do with Wi-Fi has to do with a different objective, which is a continuing desire to channel-shift people into more direct channels to lower distribution costs. I think I would view that as a good thing generally for the industry and for individual players."
Hyatt reported gains in transient demand in the United States, with fourth-quarter transient revenue up 7.3 percent year over year at comparable full-service hotels. Strong market performers included Atlanta, San Diego and Washington, D.C.
On the group side, Hyatt's revenue was up more than 1 percent for the quarter, in spite of lower demand at two large group locations and renovations at another. Hyatt CEO Mark Hoplamazian said he remains optimistic about group performance in the upcoming year.
"Our group revenue pace remains strong for 2015, up slightly over 7 percent with nearly 75 percent of our group business on the books for 2015," Hoplamazian said.
Hyatt's fourth-quarter occupancy was 71.1 percent, up from 70.7 percent in the same period last year, and ADR was $181.70 percent, up from $177.40. For the year, occupancy was 73.7 percent, up from 72.4 percent, and ADR was $180.40, up from $174.08 in 2013. Hyatt's fourth-quarter income improved to $182 million from $32 million, and its annual income was $344 million, up from $207 million last year.