Hilton reported slower-than-expected growth in revenue per available room (RevPAR) in the third quarter, though strong group bookings and recovering business travel helped offset moderating leisure demand.
Hilton’s Q3 RevPAR increased 1.4% year over year, but fell short of company guidance, which CEO Christopher Nassetta attributed to a “slower ramp in September following Labor Day, weather impacts, unfavorable calendar shifts and ongoing labor disputes in the U.S.”
Since early September, hospitality union Unite Here has organized rolling strikes across multiple U.S. cities, impacting hotels in the Hilton, Hyatt and Marriott International portfolios. As of Oct. 20, active walkouts remained in effect at Hilton properties in Boston, Honolulu and San Francisco.
Despite the labor challenges, Hilton saw encouraging trends in business travel, with that sector’s RevPAR growing 2% across large corporate accounts and small and midsized businesses.
“I think you’re going to continue to see business transient grind up,” Nassetta said. “I do think next year we will likely surpass prior peaks of 2019 in terms of demand level.”
Group RevPAR showed even stronger performance, rising more than 5%, driven by corporate and social meetings/events.
“Company meetings and convention business continue to grow as a percentage of mix, driving longer booking windows,” said Nassetta.
He added, however, that leisure travel continues to show signs of “normalizing,” with leisure RevPAR declining modestly from post-pandemic peaks during the quarter. Still, Nassetta emphasized that leisure “is still treading way over historical levels.”
Regional performance was mixed. U.S. RevPAR was up 1%, buoyed by group business, while the Americas region outside the U.S. had 4% growth, driven by strong performance in urban markets, particularly in Mexico.
Europe demonstrated robust 7% RevPAR growth, benefiting from major events such as the Olympics in France and European soccer championships in Germany.
In the Middle East and Africa, RevPAR increased 3%, while it was down 3% in the Asia Pacific region. In China alone, RevPAR declined 9% in the quarter, with Hilton CFO Kevin Jacobs pointing to negative impact related to difficult year-over-year domestic travel comparisons, typhoon-related disruptions and limited international inbound travel.
Hilton’s Q3 occupancy came in at 75.3% for the quarter, up 0.3 percentage points, while average daily rate (ADR) increased 1%, to $161.18.
The company’s net income was $344 million, down from $379 million in the same period last year. Hilton reported third-quarter revenue of $2.87 billion, up from $2.67 billion in the third quarter of 2023, a 7.3% increase.
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