Despite headwinds from the Covid-19 omicron variant that impeded corporate travel momentum late in the period, Hilton Worldwide's fourth-quarter business transient room nights reached approximately 80 percent of fourth-quarter 2019 levels, CEO Christopher Nassetta said during the company's quarterly earnings call.
That demand level not only portends a stronger 2022—"I think there's a really good chance, on a run rate basis, that we will end up back at or above where we were in 2019 before the year is out," Nassetta said of corporate business—but also illustrates the resilience of the small and midmarket enterprise segment, on which Hilton has increased focus during the pandemic.
Nassetta projected that large corporate customers "through the third and fourth quarter, they were 70 percent or 80 percent off still" from 2019 levels. But the SMEs, he said, continued to travel heavily.
“We found that surprisingly large corporates disappeared [in 2020], but the SME's were still out there more than others. Why? Because their business requires them to be out there,” said Nassetta.
And while the company turned its Covid-era focus to SMEs, Hilton also pivoted “a whole bunch of our infrastructure and retooled our entire sales force to make sure that we didn't abandon the large corporates and those relationships," Nassetta said. "We kept our entire sales team on payroll during the whole crisis.”
Looking beyond Q4, Nassetta said the post-omicron recovery looked robust, even in the earliest days of 2021. “In the beginning of January, midweek U.S. transient bookings for all future periods were down 13 percent from 2019 levels and improved to just down 4 percent by the end of the month.”
Q4 Key Performance Metrics
Hilton's global systemwide comparable revenue per available room increased 104.2 percent and 60.4 percent, on a currency-neutral basis, for the fourth quarter and full year, respectively, from the same periods in 2020. Compared to the same periods in 2019, however, global systemwide comparable RevPAR was down 13.5 percent and 30 percent, on a currency neutral basis, for the fourth quarter and full year 2021, respectively. In the U.S., systemwide comparable RevPAR increased 109 percent and 64.5 percent, respectively, compared to the same periods in 2020.
Occupancy levels for fourth quarter and full year were 61.3 percent and 57.2 percent, which were 20.7 percentage points and 16.9 percentage points, respectively, higher than the same periods in 2020. In the U.S., occupancy levels for fourth quarter and full year were 63.3 percent and 60.8 percent, respectively, spiking 21.8 percentage points and 18.8 percentage points, compared to the same periods in 2020.
Average daily rate for fourth quarter and full year increased 35.2 percent and 12.9 percent, respectively, compared to same periods in 2020. In the U.S., ADR increased for fourth quarter and full year 37.4 percent and 13.8 percent, respectively, compared to same periods in 2020.
Hilton Worldwide netted $148 million in the final three months of 2021 and $487 million for the full year, according to the company.
Development Pipeline
Hilton opened more than “a hotel a day” in 2021, representing a record 67,000 rooms. Fourth-quarter openings alone totaled more than 16,000 rooms, driven largely by the Americas and Asia Pacific regions. Among the fourth-quarter firsts was Hilton’s extended-stay brand, Home2 Suites, opening its first property in China. Hilton is expanding its Conrad luxury brand and growing its fledgling brands Motto and Canopy in cities including New York, Chicago, Paris, Madrid and São Paulo.