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Hilton CEO Chris Nassetta expressed some measured optimism during the company’s third-quarter earnings call Wednesday, reporting steady progress on the systemwide occupancy front and a gradual pick-up in global travel demand.
“Occupancy is meaningfully up from the lows we saw in April,” Nassetta said. “With more than 97% of our global hotels open and operating, we estimate the vast majority of those hotels are operating at break-even occupancy levels or better.”
For the quarter, Hilton’s global RevPAR was down approximately 60% year over year, with performance for the group’s urban, full-service hotels especially challenged due to “a lack of meetings and events, negligible international travel and local Covid protocols.”
The company reported a particularly strong comeback in the Asia Pacific region, where China has seen robust domestic leisure travel demand. According to Nassetta, occupancy in China neared 70% in August, marking the country’s highest occupancy level since December 2019.
In the U.S., Hilton saw systemwide occupancy improve steadily month over month in both July and August but remain largely stagnant in September, as leisure travel demand slowed into the fall.
U.S. hotels did report a strong showing for the Labor Day weekend, however, with roughly half of Hilton’s U.S. properties achieving occupancy levels of 80% or higher during that holiday period.
In Europe, Hilton saw the region’s positive summer momentum stall in September, and Nassetta cited rising coronavirus cases and tightening government restrictions. He estimated that European occupancy hovered at the 35% level throughout August and September.
“Europe is definitely going a bit backwards, Asia continues to move a little bit forward and the U.S. is sort of steady,” Nassetta told investors. “There is risk, depending on what goes onwith the virus. But our best sense of it at the moment is that people are figuring out how to manage their own risk profile, and as long as their countries aren’t locking them down, there is some level of mobility that will likely allow us to maintain this level of operations that we’ve been seeing.”
Nassetta added that the company has continued to see the average booking window shrink as travelers opt to make last-minute travel plans. Around two-thirds of Hilton’s business is now being booked within seven days of arrival, and almost 40% is being booked same-day.
“It’s a lot of drive-to business,” Nassetta said. “People pick up the phone and call [the hotel to book] like the old days. Our percentage of direct has stayed the same, but it’s shifted, where hotel direct has gone way up and [direct] digital channels have gone down.”
For the third quarter, Hilton reported a revenue decline of roughly 61%, to $933 million. The company reported a net loss of $81 million for the quarter, versus net income of $290 million for the same period last year.
Source: travelweekly.com