Despite high inflation and a slowing global economy, Hilton CEO Chris Nassetta remains optimistic about the company's continued progress, telling analysts that the hospitality sector's fundamentals remain "pretty strong."
In the third quarter, the company surpassed 2019 levels for revenue per available room (RevPAR) for the first time since the pandemic began, added Nassetta. Systemwide RevPAR came in 5% above 2019.
"We have these tailwinds of [people] spending more on experiences, international travel, pent-up demand and then incremental demand associated with people having to run their businesses and gather for meetings and events of all sorts," Nassetta said during the company's Q3 earnings call Wednesday. "At the moment, those tailwinds are stronger than the headwinds."
Nassetta also cited data indicating that consumers still have a relatively high level of excess savings accumulated since the start of the pandemic. Also, a Hilton survey found that 85% of business travelers hope to travel as much or more next year than this year.
Business travel appeared to stage a solid comeback in the third quarter, with Nassetta reporting that RevPAR from business travelers had reached 2019 levels, thanks in part to a "notable acceleration" in travel by large corporations.
Group travel remained similarly robust, with that segment reaching approximately 93% of 2019 levels in Q3.
Lastly, leisure travel continued to underpin Hilton's pandemic-era rebound, as leisure RevPAR exceeded 2019 levels by more than 11% for the quarter.
Average daily rate (ADR) also strengthened, improving from 2021 and surpassing 2019 levels by 11%, according to Nassetta.
Hilton's systemwide occupancy came in just 4 percentage points shy of 2019 levels.
For the third quarter, Hilton reported a systemwide RevPAR increase of 29.9% from a year earlier, to $114.04. Occupancy rose nearly 9 percentage points, reaching 73.2%, while third-quarter ADR was up 14.5%, hitting $155.86.
Third-quarter revenue increased 35.4% from a year earlier, to $2.37 billion. Hilton posted a net income of $346 million for the third quarter, up from $240 million in the third quarter of 2021.