U.S. hoteliers' RevPAR gains reflect demand at upscale brands


Hilton Worldwide and Marriott International are among the larger U.S. publicly traded hoteliers reporting fourth-quarter results last month that reflected both continued increases in upper-end room demand and a slight trailing off in overall revenue growth toward the end of the fiscal year.

Hilton, which became the No. 2 publicly traded U.S. hotelier to Marriott when it went public in December, said Q4 revenue per available room (RevPAR) at its luxury Waldorf Astoria and upper-upscale Embassy Suites brands rose 7.7% and 6.8% from a year earlier, respectively.

Overall, Hilton's RevPAR advanced 4.7%, as Asia-Pacific's 8.6% surge in RevPAR more than offset the 3.2% decline in the Middle East and Africa. North America RevPAR advanced 4.7%. As a result, Hilton's Q4 revenue rose by 13% from a year earlier, to $2.64 billion.

"We see generally improving conditions and optimism for 2014," Hilton CEO Christopher Nassetta said on a Feb. 27 conference call with analysts. "This improved demand will be paired with muted supply growth."

Still, net income fell 57%, to $26 million, on higher general and administrative costs as the company prepared to go public. And overall RevPAR growth slowed relative to the full-year growth rate of 5.2%.

Hilton's report followed similar results from Marriott, Starwood Hotels & Resorts and Hyatt Hotels. Marriott's Q4 RevPAR increased 4.7% from a year earlier, down from its full-year 5.4% increase.

Leading the gains was the Ritz-Carlton luxury brand, whose RevPAR jumped 10% from a year earlier. RevPAR at Marriott's flagship brand rose 4.9%, while Courtyard RevPAR increased 5.3%, offsetting near-flat demand increases at Renaissance and Residence Inn.

Marriott's Q4 net income fell 17%, to $151 million, while revenue declined 14%, to $3.22 billion, because of an accounting period that was 18% shorter than a year earlier.

Meanwhile, RevPAR at Starwood's St. Regis and Luxury Collection hotels jumped 11% from a year earlier, while W Hotels' RevPAR was up 6.1%. Overall, North American RevPAR advanced 6.1%. Global RevPAR rose 5.3% as it was pulled down by relatively tepid growth in China, Europe and the Middle East.

Starwood's Q4 earnings fell 9.9%, to $128 million, from a year earlier, when it had a $77 million gain on discontinued operations. Revenue was down 1.8%, to $1.51 billion, on lower sales from its Bal Harbour luxury condo project in Florida.

Hyatt's Q4 RevPAR grew 5.9%, pulled up by a 7% RevPAR increase at the hotelier's full-service properties in the U.S. RevPAR at Hyatt's Andaz upper-upscale boutique brand jumped 9.3%, while the flagship Hyatt brand's RevPAR rose 6.9%. Hyatt's Q4 net income doubled, to $32 million, while revenue rose 9.1%, to $1.09 billion.

On the more moderate end, Choice Hotels International's RevPAR increased just 1.3% from a year earlier, a drop from the 3.6% increase for the first nine months of 2013. Its flagship Comfort Inn brand had a 1.5% RevPAR increase, while RevPAR at the Clarion badge was little changed.

Choice Hotels still reported a 12% jump in Q4 net income, to $27.3 million, as the company cut both selling and administration costs and interest expenses. Revenue rose 1.3% from a year earlier, to $180.7 million.

Somewhat bucking the upscale-demand trend was Wyndham Worldwide and Extended Stay America. Wyndham hotels' 3.8% RevPAR increase was led by the company's Microtel Inn's demand gains. Net income rose 6.2%, to $86 million, largely because of results at the company's vacation-ownership division. Revenue rose 9.2%, to $1.2 billion.

Extended Stay America, which went public in November, recorded a 5.7% increase in Q4 RevPAR, primarily on room-rate increases. The company narrowed its net loss by 53%, to $15.4 million.


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