During their full-year earnings calls in February, most hoteliers
reported a post-election
bump in business transient demand, but Hilton didn't see any further pickup
from the segment during the first quarter, according to CEO Christopher
Nassetta.
Instead, the segment has remained "pretty consistent,"
he said. Business transient demand could improve further depending on President
Donald Trump's tax reform proposal, as well as global economic growth, which is
forecast to rise 3.5 percent this year, according to an April report from the
International Monetary Fund. "Ultimately, time will tell," Nassetta
said.
In terms of group demand, he said the company feels positive,
as bookings for all future periods are up "meaningfully." The pace of
bookings for the first quarter "was up quite nicely," he said, while the
pace for the full-year 2017 declined marginally. That has been common in recent
years because of high occupancy levels, he added. TravelClick's April North
American Hospitality Review similarly reported that committed occupancy for the
group segment is down 0.9 percent compared to the same period last year across
the top 25 markets.
Hilton experienced year-over-year increases in occupancy and
average daily rate during the first quarter of 2017. Occupancy rose 1.6
percentage points to 70.9 percent, while ADR grew 0.6 percent to $141.55.
Though Hilton management and franchise fees increased during
the quarter, owing to revenue per available room growth of 2.7 percent, the
company hasn't changed the 2017 RevPAR guidance it offered in February. Hilton
maintains RevPAR will grow 1 percent to 3 percent this year.
Hilton opened 70 hotels comprised of 9,900 rooms during the
first quarter. As of March 31, its development pipeline totaled 2,084 hotels—approximately
325,000 rooms—across 99 countries. Half the company's pipeline is made up of
rooms outside the U.S., and a third of the rooms under development are for
Hilton's newest brands.
The first Tru by Hilton opened last month in Oklahoma City.
As of mid-April, the midscale brand, which launched
in 2016, already boasted almost 425 hotels in approval stages. It expects to
complete 10 by year-end and another 75 in 2018. Hilton also expects its other newcomer
brand, Tapestry Collection by Hilton, to open its first property during the
second quarter.
In March, HNA Tourism Group completed
its purchase of 82.5 million shares of Hilton common stock, a 25 percent
stake, from the Blackstone Group.
Net income for the first quarter was $75 million,
down from $191 million during the first quarter of 2016. The decline is a
result of Hilton's completed spinoffs of Park Hotels & Resorts and Hilton
Grand Vacations on Jan. 3.