Hilton CEO says direct marketing paid off in 2018

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Hilton CEO Christopher Nassetta reported a surge in direct bookings last year, telling investors on the Q4 earnings call that direct web bookings grew three times faster than other channels.

"We're focused on driving direct relationships and direct business," said Nassetta. "If you look at web direct channels, they remain the fastest growing channels we have and are growing at a much faster rate than OTA channels." 

He credited a strong marketing push, including a recent celebrity campaign featuring actress Anna Kendrick, as helping to drive the uptick.

Meanwhile, Nassetta touted a recent expansion of the Hilton Honors loyalty program, which he says is forecasted to reach over 100 million members by the end of this year.

"We're experiencing very high loyalty program growth rates," he said. "Obviously, we're getting members from somewhere, and [they're] people who are already frequent travelers, so to some degree I suspect we are getting members from other programs who are shifting their loyalty."

Nassetta highlighted that Hilton Honors has not only grown in size but also in level of engagement. He estimated that five or six years ago, just 15% to 20% of total Hilton Honors members could be categorized as "engaged," with recent stay or purchase activity. Today, nearly 50%, or 42 million Hilton Honors members, are considered engaged. 

Nassetta also doubled down on Hilton's decision to cut commissions paid on North American group bookings from 10% to 7% last year. He told investors that the company had no plans to reverse the move but added that certain third-party intermediaries could still receive incentives.

"We've had certain important relationships where we have incentive systems built in," said Nassetta, who declined to talk about any individual incentive deals. "But that, by the way, was the case back when we were at 10%, and it's the case now that we're at 7%. Those continue on to make sure we get a disproportionate share from certain players where we think it's really incremental business that our sales team has less access to."

Hilton reported a 2% systemwide increase in revenue per available room (RevPAR) for the quarter and 3% for the year, driven in part by an increase in average daily rate. Net income for the year ended totaled $769 million, down from $1.09 billion the year prior, with slower transient and leisure travel, particularly in China and the U.S., "weighing on results," according to Nassetta. 

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