Hilton’s revenue plunges 77% in Q2 but sees growth opportunities in China
08/06/2020|11:39:32 PM|Hilton

Hilton lost $432 million in the second quarter, but occupancy rates began to improve as hotels reopen and coronavirus restrictions were lifted around the world.

Hilton’s revenue plunged 77% to $564 million in the April-June period. Revenue per available room, a key measure, plunged 81% to $21.67.

In Asia-Pacific, performance is largely driven by rebounds in both leisure and business transient travel in China, where occupancy is more than 60%.

On a global level, the pervasive impact of COVID-19 began in March, with its most significant adverse impact on occupancy and RevPAR in April. Since April, all major regions have experienced month over month increases in occupancy and RevPAR. Hilton experienced the most notable recoveries in the U.S. and Asia Pacific with occupancy levels up approximately 20 percentage points and 15 percentage points, respectively, from April to June. Hilton announced a corporate restructuring in June 2020 to organize its business to be best suited to operate through the pandemic and beyond. Costs relating to the reorganization were recognized in the quarter and accrued as of June 30, 2020.

For the three and six months ended June 30, 2020, system-wide comparable RevPAR decreased 81.0 percent and 53.9 percent, respectively, due to both occupancy and ADR decreases. Additionally, management fee and franchise and licensing fee revenues decreased 77 percent and 50 percent during the three and six months ended June 30, 2020, respectively. 

* Net loss was $432 million for the second quarter

* Adjusted EBITDA was $51 million for the second quarter

* System-wide comparable RevPAR decreased 81.0 percent on a currency neutral basis for the second quarter from the same period in 2019

* Approved 18,400 new rooms for development during the second quarter, growing Hilton's development pipeline to 414,000 rooms as of June 30, 2020, representing 11 percent growth from June 30, 2019

* Opened 6,800 rooms in the second quarter, contributing to 5,500 net additional rooms in Hilton's system

* As of July 31, 2020, 96 percent of Hilton's system-wide hotels were open

* Launched Hilton CleanStay, a new program created in collaboration with RB, maker of Lysol and Dettol, and Mayo Clinic, to deliver an elevated standard of cleanliness and disinfection to properties worldwide, and Hilton EventReady, which focuses on cleanliness and customer service specific to meetings and events

* Announced a new strategic partnership with Country Garden to develop 1,000 Home2 Suites by Hilton in China, representing the first major extended stay offering for Hilton outside of North America

Christopher J. Nassetta, President & Chief Executive Officer of Hilton, said, "Our second quarter results reflect the challenges that our business has experienced as a result of the pandemic. However, as restrictions are lifting and properties around the world are reopening, we are seeing improved occupancy. While we have a long journey in front of us, we are on the road to recovery and look forward to the opportunities ahead."

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