Business travel comeback boosts Hilton's Q2 earnings: Travel Weekly

Hilton CEO Chris Nassetta reported an improved outlook for the latter half of the year during Hilton’s second-quarter earnings call Wednesday, as revenue per available room (RevPAR) for all major regions, except for Asia Pacific, surpassed 2019 levels.

Nassetta attributed the strong Q2 performance to a solid comeback in business travel as well as the continued strength of leisure travel.

That sustained leisure surge was reflected in Hilton’s systemwide weekend RevPAR, which was 14% above 2019 levels for the quarter. For the month of June, weekend ADR was up 20%.

Weekday business also proved robust, with Nassetta reporting that systemwide weekday RevPAR had reached 95% of 2019 levels.

• Related: Hotel executives optimistic as demand drives rates ever higher

“We expect to see [leisure travel] continue into the fall at higher rates than you would have typically seen pre-Covid because of increased bleisure business,” said Nassetta. “And business transient continues to recover, led by the big corporates.”

Notably, Hilton said U.S. business transient RevPAR surpassed prior peak levels in June, with demand improving “across nearly all industries,” according to Nassetta. He added that although groups continued to lag business and leisure in the second quarter, Hilton’s group business had recovered to roughly 85% of 2019 levels.

“Group mix is beginning to normalize with the percentage of company meetings increasing,” saidd Nassetta. “Bookings for company meetings strengthened each month of the quarter, with tentative pipeline for the year up materially versus 2019.”

Europe business is trending above 2019

Nassetta also highlighted a significant second-quarter rebound in Europe, telling analysts that travel to region is “on fire.”

“Europe was the big surprise for me,” he said. “The big cities are raging this summer in Q2 and they’re raging in Q3. Europe is now trending above 2019.”

On the other end of the spectrum, Nassetta discussed continued challenges in Asia, calling recovery trends in the region “way behind,” weighed down primarily by China.

Meanwhile, Nassetta remained confident that economic pressures are unlikely impact traveler spending habits in the near term, citing stronger-than-average purchasing power among Hilton’s core customer demographic.

“If we look at our [Hilton] Honors base, which drives the disproportionate share of our systemwide revenues, at the moment, they’re still in pretty good shape,” he explained. “The median income of our higher-end Honors members is significantly over $100,000 median income. We haven’t really seen any real cracks in the armor in terms of their spending pattern.”

Hilton’s net profit nearly triples

Hilton reported that Q2 systemwide RevPAR improved 54.3% from a year earlier, to $109.62. Systemwide RevPAR, however, was still down 2.1% from the same period in 2019. 

Systemwide occupancy came in at 70.8%, an increase of more than 12 percentage points, while the average daily rate improved 27.5%, to $154.92.

Hilton saw its second-quarter revenue increase 68.5%, to $2.2 billion. The company posted a net income of $367 million for Q2, up from $128 million in the second quarter of 2021.

This week, Hilton unveiled a new ad campaign starring Hilton family scion Paris Hilton and a new “global brand platform” featuring the tagline “Hilton. For The Stay.”

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