Demand from business travelers is lagging, leading Hilton
Worldwide to lower its growth forecast for 2016.
The hotel company on Wednesday estimated that revenue per
available room (RevPAR) would increase 2% to 4% this year, a reduction of a
percentage point for the top and bottom ranges.
Hilton’s second-quarter RevPAR rose 2.9%, as demand gains in
the Middle East and Africa were offset by nearly flat demand in Europe.
“The softer
macroeconomic environment continued to weigh on performance, particularly in
corporate transient growth,” Hilton CEO Christopher Nassetta said on a
conference call with analysts. “We’re tempering our expectations for the full
year.”
Within the U.S., a corporate travel slowdown affected New
York, Chicago and Houston, CFO Kevin Jacobs said. Conversely, Los Angeles,
which is buoyed by a strong leisure market, had a second-quarter RevPAR jump of
16%.
Occupancy dropped 2 percentage points for the company’s luxury
brands, Waldorf Astoria and Conrad, but U.S.-heavy Waldorf was able to increase
RevPAR by 4.7%. Conrad, which has 27 of its 32 hotels outside the U.S., had a 5.2%
drop in RevPAR.
Nassetta said that the first hotel under the new Tru brand will
open in early 2017, and that there are 120 properties in the development
pipeline for the midscale brand.