Hilton: Business Transient, Led by SMEs, Increased Throughout Q2

Hilton Worldwide’s business transient segment improved throughout the second quarter, with June revenue per available room increasing 20 percentage points compared with the first quarter, Hilton president and CEO Christopher Nassetta said Thursday during a quarterly earnings call. “We saw improving results in small and medium-sized businesses and positive momentum across larger accounts,” he said.

In June, business transient room night demand was 70 percent of 2019 levels, with average daily rate at more than 80 precent of 2019 levels, he added. The progress has been similar in July, with room night demand maintained and rates at 90 percent of 2019 levels. 

To illustrate the improvement in business travel, Nassetta noted that systemwide U.S. occupancy on July 28 was 74 percent. “If we’re running 74 percent, that’s not leisure,” he said. “While we have leisure-oriented hotels, we have a lot of business-oriented hotels. So mid-week occupancies at that level are definitely reflective of business travel being back.”

He added that weekday occupancies after Memorial Day increased 10 percent or 20 percent, “and that was dominated by small and medium-sized businesses,” he said. “But even pre-Covid, keep in mind 80 percent of our business travel was small and medium-sized business.”

The group segment, primarily driven by social events, improved sequentially during the second quarter, increasing nearly 20 percentage points from the first quarter and ending June at more than half of 2019 levels, Nassetta said. Group bookings for 2022 are at rates above 2019 peaks.

Overall, Hilton reported Q2 systemwide revenue per available room grew 233.8 percent year over year, and was down 36 percent compared with the second quarter of 2019. June RevPAR improved 24 percentage points versus the first quarter and was down 29 points compared with June 2019. Systemwide comparable occupancy was 58.5 percent for the quarter, up 36.1 percentage points year over year. Average daily rate reached $124.75, up 28 percent over the same period in 2020.

Hilton added 119 hotels during the quarter with nearly 20,000 rooms. Net units increased about 7 percent year over year, “ahead of expectations due to strong openings in the U.S. and fewer overall removals,” Nassetta said. 

The company ended the quarter with about 401,000 rooms in development, more than half of which were under construction. Hilton also had a record number of conversion signings in the quarter, representing 40 hotels and accounting for approximately 30 percent of total signings, Nassetta added. For 2021, the company expects net unit growth to be in the range of 5 percent to 5.5 percent. 

During the second quarter, Hilton also opened its first meetings-focused Signia by Hilton property, the Signia Orlando Bonnet Creek, and broke ground on the Signia Atlanta, scheduled to open in 2023. About 99 percent of Hilton’s hotels now are open.

Hilton reported net income of $128 million for the quarter, up from a loss of $432 million last year.

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