Hilton systemwide comparable revenue per available room grew 0.4 percent year over year in the third quarter, lower than the anticipated 1 to 2 percent growth the company had pegged on June 30 for the third quarter. The slower pace owed to softness in the U.S. transient market and in Asia. As a result, the company lowered its full-year 2019 RevPAR guidance to 1 percent, adjusted from the range of between 1 and 2 percent previously expected. Hilton expects more of the same in the fourth quarter and in 2020.
"Transient RevPAR was relatively flat across business and leisure, falling short of expectations due to weakening macrotrends," said Hilton president and CEO Christopher Nassetta. "As we look to next year, uncertainties in the macroenvironment make it difficult to forecast. Most indicators suggest continued economic growth for all major global regions but at a slower pace. As a result at this point, we would expect full-year 2020 RevPAR growth to be around flat to 1 percent."
Nassetta further explained that business transient will be either flat or "up a tick" and that the company is seeing a bigger impact in larger businesses because they're "more tied into what's going on in real time in the marketplace and may be reacting to the uncertainty that is out there a little bit more rapidly than small or medium-sized businesses."
On the positive side, group RevPAR "increased more than 3 percent in the quarter, boosted by strength in company meetings," Nassetta added. He also noted that "we're lapping over periods where we went from a 10 percent to a 7 percent commission," which created comparability issues for the year. Year-over-year RevPAR growth in the third quarter was "generally OK, not great," he said. "If you look at systemwide numbers, we're up in kind of the low-single digits. If you compare that to last year this time, we were up in the mid-single digits."
Net income for the quarter was $605 million, a 77 percent year-over-year increase, and the company adjusted its 2019 income guidance from a range of between $887 million and $909 million to a range of between $923 million to $937 million.
Third-quarter systemwide occupancy was nearly flat, increasing 0.4 percentage points year over year, and average daily rate declined 0.1 percent to $145.11. U.S. occupancy rose 0.3 percentage points, U.S. ADR was flat and U.S. RevPAR rose 0.4 percent. Europe fared the best among world regions; occupancy rose 1.6 percentage points, ADR increased 0.5 percent and RevPAR rose 2.4 percent.
Hilton opened 17,400 rooms in the third quarter and approved 25,200 rooms for development. It's on track to deliver 6.5 percent net unit growth for 2019. As of Sept. 30, the company had 379,000 rooms in its pipeline. "This will mark our fifth consecutive year of net unit growth above 6 percent," Nassetta said.
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