Citing conversations with Hilton Worldwide's large corporate customers coupled with recent sequential upticks in business transient booking pace seem to indicate pent-up demand for business travel "that should drive a recovery in corporate transient trends as the year progresses," Hilton president and CEO Christopher Nassetta said Wednesday during an earnings call.
Hilton saw a "meaningful step up" in new group demand in January, with the second half of the year showing "significant sequential improvement versus the first half of the year," Nassetta said, adding that the trend lines were good, with January lead volume up 50 percent compared with December and 35 percent compared with the fourth quarter.
Skipping 2020 comparisons, "because it was a washout," group business for the first half of 2021 is currently down 80 percent compared with the first half of 2019, Nassetta said. For the back half of the year, it's down 32 percent. "It's still off, but by a lot lesser margin, and that's a result of people saying, 'I've got to get out, I want to get out. I've got to have team meetings, I've got to have small group, medium-sized groups,' " he said. "Conventions are starting to book again because they are going to go out of business if they don't get booking again."
Still, even though business transient booking trends are improving week by week, and the fourth quarter showed sequential improvement in business transient and group demand compared with the prior quarter, overall demand remained muted at the end of 2020. Actual 2021 results will depend not least on what happens with Covid-19, the pace of vaccinations and whether it's safe to travel and meet. But Nassetta noted that Hilton survey results showed that more than 80 percent of its respondents said they have to get back out on the road, which is the highest number the company has seen since the pandemic began.
Q4 and Full-Year 2020 Results
Hilton's fourth-quarter systemwide comparable revenue per available room decreased 59.2 percent year over year on a currency-neutral basis to $40.68. The occupancy rate was down 31.7 percentage points to 40.1 percent. Average daily rate dropped 26.9 percent to $101.39.
For 2020 overall, RevPAR was down 56.7 percent year over year to $46, occupancy fell 34.4 percentage points to 40.3 percent, and ADR declined 19.6 percent to $114.03.
By region, Asia-Pacific saw the least declines in occupancy and RevPAR for both the fourth quarter and the full year 2020. Occupancy was down just 15.8 percent year over year for the quarter and 26.3 percent for the full year. RevPAR dropped 37 percent for the quarter and 49.5 percent for the year.
As of Feb. 10, 2021, 97 percent of Hilton's systemwide hotels were open, with the remaining closed properties to be reopened by the end of the second quarter. The company opened 22,900 rooms in the fourth quarter, reaching the one-million milestone and contributing to 47,400 net additional rooms in the Hilton system for the full year. Those openings represented 5.1 percent net unit growth compared with Dec. 31, 2019. The company anticipates net unit growth of between 4 percent to 5 percent per year for the next three years.
Hilton approved 18,700 new rooms for development during the fourth quarter and ended 2020 with 397,000 in its development pipeline, up 3 percent year over year. Conversion signings increased during the year by 30 percent.
The company reported a net loss of $225 million for the fourth quarter and $720 million for the full year.
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