Recovering Corp. Travel Boosts Hilton's Q4

Powered by gains in business transient and small corporate group revenue, Hilton Worldwide on Wednesday reported an overall fourth-quarter year-over-year revenue per available room increase of 5.7 percent. Meanwhile, Hilton announced a loyalty partnership with the Small Luxury Hotels of the World boutique hotel collection.

Fourth-quarter business transient RevPAR increased 4 percent year over year on higher occupancy and rates, Hilton president and CEO Christopher Nassetta said Wednesday during an earnings call. The gains again were led by small and midsized enterprises, he said, but noted that larger companies were recovering too.

"The big corporates finished the year still a bit off, probably 5 percent off of where they were but still growing," Nassetta said. "Most segments were relatively strong and either back to or beyond prior to pandemic levels, with the exception of probably banking, technology and consulting, which were less. But blended together, they weren't that far off."

SMEs accounted for about 85 percent of Hilton's business transient mix, as well as a "meaningful and growing percentage of our group mix," he said, and that segment's RevPAR has surpassed pre-pandemic levels. 

In Q4, "from a RevPAR point of view, business transient was ahead, but from an occupancy point of view was still a bit behind," Nassetta said. "We do think that by the time we finish this year, assuming the broader consensus view of a reasonably soft landing … we think will be at more normalized levels of demand."

"Thousands" of organizations have registered for the company's Hilton for Business rewards program, designed for SMEs, since it was unveiled in January, he said. 

Small company meetings helped Hilton's fourth-quarter group RevPAR increase 6 percent year over year, Nassetta said, and the sector remains red-hot. "Demand is really strong, he said. "Every quarter is the next new high-water mark in terms of bookings for all future periods."

Q4 Metrics, 2024 Outlook

Hilton projected year-over-year increases in first-quarter and full-year 2024 RevPAR of 2 percent to 4 percent, a figure below that of some recent industry projections, including that of STR and Tourism Economics, which forecast 4.1 percent 2024 growth. Still, Nassetta projected Hilton would have "pricing power" in the business transient segment and "everywhere else," given "very low supply numbers that are continuing and continued decent economic growth."

Hilton's systemwide fourth-quarter average daily rate was $156.07, up 2.7 percent year over year. Occupancy increased 2 percentage points to 69 percent. RevPAR increased 5.7 percent to $107.69.

Total fourth-quarter revenue increased 6.7 percent to $2.6 billion. Net income was $150 million, compared with $333 million in the fourth quarter of 2022.

Hilton's development pipeline at the end of the fourth quarter comprised 462,400 rooms, a record and an 11 percent increase year over year.

Small Luxury Hotels of the World Partnership

Hilton also announced a partnership with Small Luxury Hotels of the World in which customers will be able to book through Hilton channels participating properties in the boutique hotelier's 560-property collection, and Hilton Honors loyalty program members will be able to earn and redeem loyalty points. Hilton said the partnership would "ramp up in the months ahead."

While many SLH properties are in resort locations, a number are in urban locations, Nassetta said, and "I think business transient will be a meaningful component of it, particularly in those hotels in the right locations."

SLH formerly had formed a similar loyalty alliance with Hyatt Hotels Corp., but a Hyatt spokesperson confirmed to BTN that the companies had "mutually made the decision to end our relationship with SLH in the near future," though World of Hyatt loyalty program members still can book participating SLH Hotels on Hyatt booking channels. Hyatt in 2024 plans to integrate boutique properties listed in Mr & Mrs Smith, the London-based booking platform it acquired last year, according to the spokesperson.

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