Hilton Worldwide on Tuesday cited substantial contributions from business travel and groups to its first-quarter performance as the segment showed signs of returning to form, after an overall "choppy start" to the year. The company reported net income of $211 million for the first quarter, compared to the $109 million net loss one year earlier.
Hilton's March business transient revenue per available room was 9 percent below March 2019, executives reported during the hotel company's earnings call Tuesday. “Improving trends from large accounts, along with continued strength from [small and midsize enterprises], boosted results in March," president and CEO Christopher Nassetta said. He cited March revenues from large accounts at just 12 percent below 2019.
Currently, Nassetta pegged business travel at 45 percent of Hilton's overall business mix, compared to 55 percent prior to the pandemic. He projected the gap would close by the end of 2022, citing rising corporate profits, rebounding demand from big businesses and loosening travel restrictions.
Group RevPAR by the end of March had reached more than 75 percent of 2019 comparables, according to Nassetta, led by smaller events and social gatherings. "Additionally, group revenue booked in the first quarter for all future periods was down just 4 percent relative to 2019 levels, and total lead volume for all future periods was up 3.5 percent," he said. Demand for larger corporate meetings and conventions was "accelerat[ing] into the back half of the year." The company projected group RevPAR would recover to 90 percent of 2019 comparables by the close of 2022.
Business and meeting travel can expect higher rates at Hilton compared to 2019. Nassetta cited meeting rates in particular with "tentative booking revenue … up significantly with rate gains for company meetings up more than 13 percent" and "rates on new group bookings for in-year arrivals … up in the high single digits versus 2019."
Q1 Highlights
Hilton's first-quarter global occupancy was 58.1 percent, a 14.6 percentage-point year-over-year increase. Worldwide average daily rate was $139.17 for the quarter, a 35.2 percent increase. Systemwide RevPAR reached $80.84, up slightly more than 80 percent. In terms of regions, the Middle East led with the strongest numbers for every metric, followed by the United States. Systemwide comparable RevPAR for the first quarter was down 17 percent on a currency-neutral basis, compared to the first quarter of 2019.
Hilton added 13,200 rooms to its system in the first quarter, contributing to a net increase of 7,800 rooms during the period. The company also approved 22,200 new rooms for development, bringing Hilton's development pipeline to more than 410,000 rooms, which is an increase from the first quarter of 2021 and accelerating from the fourth quarter of 2021.