Hilton Worldwide reported low-single-digit growth in average daily rate and room revenue for the fourth quarter of 2018, along with double-digit growth in management and franchise fees, which have been a strength throughout the year. The company beat its earnings guidance with net income of $225 million for the quarter and $769 million for the year.
International properties spurred ADR and room revenue growth in the final stretch of 2018. Both Europe and the Americas excluding U.S. outperformed other regions. Europe's ADR rose 5.3 percent year over year for the quarter, and the Americas excluding the U.S. increased 4.7 percent. Revenue per available room jumped roughly 7 percent in both regions.
Systemwide ADR increased 2 percent in the fourth quarter to $144. Hilton pegged full-year 2018 ADR at $147, up 1.9 percent over 2017. Overall RevPAR also rose 2 percent in the final quarter compared to the same period the prior year. Full-year RevPAR increased 3 percent.
Group RevPAR rose 4 percent in 2018, driven by convention business in key markets. Corporate transient RevPAR increased 2.6 percent for the year but lagged in the fourth quarter, according to president and CEO Christopher Nassetta.
Management and franchise fee revenue grew 14 percent for the fourth quarter and 12 percent for the full year.
Looking forward, Hilton projects full-year 2019 RevPAR will rise between 1 percent and 3 percent. The hospitality company expects net income between $895 million and $931 million. Growth in its management and franchise fees is projected to slow to between 7 percent and 9 percent.
Hilton opened 22,500 new rooms in the fourth quarter but held steady as occupancy rates hovered around 75.8 percent. The hotel company had 2,400 hotels in its development pipeline as of the end of 2018 and plans to expand its footprint into 35 additional countries and territories.
Hilton also aims to enhance its Hilton Honors mobile app, expanding Connected Room capability to lighting, TV and temperature controls and connecting 300 additional properties. The company also will continue to build its app-powered Digital Key inventory through 2019. "We are optimistic about what the future holds for Hilton and believe we are well positioned to continue driving growth ahead of industry trends." said Nassetta.
For the U.S., at least, industry growth expectations may be easier to beat. STR recently downgraded its outlook for the region. Researchers predicted overall RevPAR growth will slow to 2.3 percent in 2019, compared with the 2.9 percent growth for the industry in 2018 and 2017, which was already the lowest annual RevPAR increase for the U.S. hotel market since 2009. STR expects U.S. RevPAR growth to sputter to 1.9 percent in 2020.
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