Hilton anticipating rush of group travel bookings

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Hilton [Credit: Toronto Images/Shutterstock.com]
Hilton's occupancy in Q2 was 59%, up 14 percentage points from the first three months of the year. Photo Credit: Toronto Images/Shutterstock

Following strong second-quarter results driven primarily by robust leisure demand and rate growth, Hilton CEO Chris Nassetta said he remains very positive about the second half of the year despite an increase in the Covid-19 case rate attributed to new variants of the virus.

"We're very optimistic," he said. "We read the papers, we talk to a lot of people, and we're not oblivious to the delta variant and other things going on in the world. We're confident because we think we'll power through that. … With every quarter going by, we're feeling better and better about the recovery."

Once we get past the delta variant wave, 2022 will be a barn-burner year [for group travel].– Hilton CEO Chris Nassetta

Nassetta said he believes group travel will take a little longer than business and leisure travel to return, but he predicted "gargantuan demand" in 2022 for group bookings. 

"I think once we get past the delta variant wave, 2022 will be a barn-burner year [for group travel]," he said. "People have to meet, but they have to plan it." 

Nassetta said next year's group travel volume "is not going to be where we were in 2019, but it will be close and the rates will be above." 

Hilton's average daily rate systemwide for the second quarter was $124.75, up from $105.38 in the first quarter.

Systemwide comparable revenue per available room (RevPAR) increased 234% for the second quarter from the same period in 2020, while still 36% below the same period in 2019. 

Systemwide occupancy in Q2 was 59%, up 14 percentage points from the first three months of the year. The occupancy rate at U.S. properties rose 16 percentage points, to 64%.

The occupancy rate continued to rise in June, Nassetta said, and the data indicates business travel steadily returning in the U.S. As workers continue a gradual return to offices and children resume in-person schooling, he expects that trend to continue into the fall and late 2021 with a small dip in August as people get in one "last hurrah" before summer ends. 

As of July 21, 99% of Hilton's systemwide hotels were open, compared to 97% at the end of April. 

T0628RESORTSWORLD1_C_HR [Credit: Resorts World]
Massive but doable

The sheer size of Resorts World Las Vegas is what hits you as you approach the complex. Yet, as you make your way through the place, the size becomes less overwhelming. 

Hilton opened 119 new hotels during the three months ending in June, with net unit growth of roughly 17,800 rooms. The openings included the Hilton, Conrad and Crockfords hotels at the Resorts World Las Vegas (a total of 3,500 rooms). For 2021, Hilton predicts net unit growth in the range of 5 to 5.5%.

"So goes the recovery, so goes the development," Nassetta said. "We've raised our outlook for the year, and that's largely driven by what we're seeing in the faster recovery in the U.S. and faster recovery in Asia, China."

After posting a first-quarter net loss of $109 million, Hilton reported second-quarter net income of $128 million. 
"We're obviously pleased with Q2 relative to where the business has been," Nassetta said. "I'm very bullish not just on the second half of this year, but also bullish about the recovery as we go into 2022 and beyond." 

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