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What a healthy Hilton says about the hotel industry now

02/14/2019| 6:22:35 PM| 中文

Hilton’s Web Direct channels of all types grew three times the rate of other channels.

Hilton reported strong fourth quarter and full-year earnings for 2018 on Wednesday morning — so much so that shares rose 6 percent to their highest level since last October.

Most tellingly, systemwide revenue per available room (RevPAR) grew 3 percent in 2018, with group business RevPAR up 4 percent and corporate transient RevPAR up 2.6 percent. Leisure transient RevPAR was also up 2.6 percent, but was lower than expected.

In different investors notes, Jeffries equity analyst David Katz described Hilton’s earnings results as “healthy” and R.W. Baird senior research analyst Michael Bellisario wrote Hilton’s fourth quarter results “easily topped expectations and guidance.”

Despite Hilton CEO Chris Nassetta’s confidence in Hilton’s business model — the strength of its net unit growth, expansion in China, a growing loyalty program membership, and strong RevPAR stats in 2018 — analysts peppered him with questions about pipeline decreases, concerns about China given the trade wars, the rise in conversions, and the modest leisure travel decline.

Addressing concerns in the slight decline in pipeline growth at the end of 2018, Nassetta emphasized that the pipeline for the full year was up 6 percent, and that pipeline growth “may vary quarter to quarter.” He said that by the end of 2019, he expects “sequential improvement year-over-year through ’19.”

About China

Like a number of other travel brands seeking expansion in China, Hilton too is seeing some impact from the softening economic growth in China, as well as looming concerns over a potential trade war with the U.S.

Nassetta noted how the biggest declines in leisure transient travel came from China primarily because of “trade war issues” and the “slower economies.”

Thirty percent of Hilton’s pipeline is located in the Asia-Pacific region, and the company expects to open 20,000 rooms in the region by this year, achieving a net unit growth of 20 percent.

Nassetta said he believes the pipeline of new hotel projects for Hilton in China “is in good shape” and that he’s also seen interest shift from more luxury brands to “midmarket” brands such as Hampton by Hilton and Hilton Garden Inn thanks to the growth of the Chinese middle class.

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TAGS: Hilton | financial report
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