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Three months after launching a campaign intended to get
guests to book direct with the promise of lower room rates and free Wi-Fi,
Hilton Worldwide reported growth in bookings through Hilton.com and its mobile
"We have global scale in a business where scale matters
and are using it to drive a more direct relationship with all of our customers,"
CEO Christopher Nassetta said during the company's quarterly earnings call on Wednesday.
"The business we received through web direct is higher than it's ever been
and is growing faster than ever, thanks to increasing share shift. The share of
web direct channels in our distribution mix is growing five times that of the [online
travel agency] share of growth in the quarter."
Nassetta said HHonors enrollment since the launch of its
direct booking campaign increased almost 90 percent, and HHonors occupancy hit a
record 55 percent during the first quarter, a 4-point year-over-year increase.
Hilton's decision to market direct booking through its loyalty
program as a way for guests to gain perks like free Wi-Fi and online check-in has
led other lodging players to follow suit. Marriott this month began adding Marriott
Rewards member rates to its website that are lower than retail rates. Hyatt last
week announced a similar
initiative, tying lower rates and complimentary amenities to direct bookings
made on Hyatt.com or through its app.
One travel manager, who preferred not to be identified, noticed
the new Marriott rates and expressed concern about the growing trend from hoteliers.
"It confirms my suspicions that the sales teams are not working close enough
with [the loyalty teams] to protect the integrity of the corporate rates offered,"
the travel manager said. "I am almost convinced that they are trying to take
our travelers from our managed programs and push them right into their own Brand.com.
This tactic may seem good right now, but long-term I think they will hurt themselves
as they hurt the relationship between the buyer and supplier."
Hilton's Q1 Results
Hilton reported positive metrics for the first quarter despite
softening occupancy and corporate transient demand.
Average daily rate increased 2.5 percent year over year to $141.62.
Occupancy dropped 0.3 percentage points year over year to 70.2 percent. Weakness
in business transient growth caused a 60 basis point drag on occupancy, CFO Kevin
"The best visibility we have on the demand side continues
to be in the group business segment, which remains healthy," Nassetta said.
"We have less visibility in the transient segment, which makes up the largest
portion of our business and historically tracks more closely [than group] with macro-indicators,
such as GDP growth. We did see strong U.S. booking pace across all segments and
channels, in the month for the month of April, particularly in corporate transient."
Group room revenue increased almost 4 percent year over year
during the quarter in Hilton's Americas owned and managed portfolio. Hawaii and
San Francisco were the two top markets for year-over-year group revenue growth, Jacobs said, and the company benefited from corporate
Hilton opened 67 hotels, comprising a total of more than 9,200
rooms, during the quarter. Its global portfolio currently stands at 4,615 properties.
Hilton cited significant interest in its new Tru by Hilton brand, first unveiled
in January. Nassetta said the company currently has 48 hotels in the pipeline
and 170 more deals committed or in-progress.
Hilton's total first-quarter revenue increased to $2.75 billion
from $2.6 billion last year.
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