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Hilton CEO Christopher Nassetta said the economic policies considered by the Trump administration are likely to outweigh the effects of the potential fallout from president Donald Trump’s attempts at travel restrictions. The head of the second-largest U.S. hotel company, behind Marriott International, also said Hilton could unveil a soft brand, the company’s third, by the end of the year, and he added that the direct-booking campaign is pulling reservations away from OTAs and other intermediaries.
Nassetta, speaking on Hilton’s fourth-quarter earnings call with analysts on Wednesday morning, pointed to both the potential for tax reform and lending-requirement adjustments as well as the continually strong dollar as reasons why near-term U.S. business-travel spending will more than offset any lags from inbound travel. In fact, Nassetta attributed the drop-off in inbound international travel more to the stronger dollar than to travel policies.
“The psychology in the business community is certainly more positive than when we talked the last time” in late October, said Nassetta, who did not mention the president by name. “We have not seen any material impact as a consequence of what’s happened during the past two or three weeks.”
With that in mind, Hilton, which last year set annual records in both hotel openings and signings, forecasted that year-over-year growth in revenue per available room (RevPAR) would accelerate to about 2% during the first quarter from 0.9% in the fourth quarter of 2016. Additionally, the company, which last month introduced a soft brand called Tapestry Collection that would be priced below the Curio soft brand that Hilton debuted in 2014, is considering adding four brands to its current 14 and will “maybe” add a soft brand by the end of the year, Nassetta said.
Nassetta’s portrayal of the new presidential administration’s impact on the business-travel sector appears to contradict that of the Global Business Travel Association (GBTA), which last week estimated that $185 million in business-travel bookings have been lost because of President Trump’s attempted travel ban on citizens from seven predominantly Muslim countries. That ban was overturned by the courts late last week, though it continues to wend its way through the legal process. The GBTA also estimated that business-travel transactions fell 8% between December 2016 and January 2017.
Meanwhile, Hilton, which in October forecasted fourth quarter RevPAR growth of about 0.5%, achieved a 0.9% increase, as higher demand in Europe helped offset lagging demand in the Middle East and Africa. Among Hilton’s brands, Home2Suites and Waldorf-Astoria performed best, while RevPAR for both the Conrad luxury brand and Curio declined.
Hilton took a Q4 loss of $382 million, compared with year-earlier net income of $816 million, as the company took a $513 million charge for corporate restructuring when the company spun off its vacation-rental business and its real estate holdings into the Hilton Grand Vacations and Park Hotels & Resorts entities on Jan. 3. Revenue rose 2.2%, to $2.92 billion.
Hilton, which last year debuted its “Stop Clicking Around” direct-booking campaign geared toward loyalty members, said the campaign has been effective at both boosting loyalty membership and reducing third-party bookings. Loyalty members accounted for 56% of Hilton’s occupancy last year, up from 52% a year earlier. Direct bookings as a percentage of total bookings were up 2% within the past year.
Marriott International will announce fourth-quarter earnings results on Wednesday afternoon, and will discuss those results Thursday morning.
Sourse: travelweekly.com
