Dive Brief:
- Ongoing labor disputes in the U.S. contributed to lower-than-expected RevPAR growth for Hilton in the third quarter of 2024, CEO Chris Nassetta shared in an earnings call.
- The slower top-line growth, 1.4% year over year, was also driven by “modestly slower macro trends,” weather impacts and unfavorable calendar shifts, Nassetta shared.
- Other economic indicators, however, were strong, with Hilton opening a record 531 hotels in the quarter, 60% of which were conversions. Despite the softer-than-expected RevPAR performance, adjusted EBITDA of $904 million “exceeded the high end of our guidance,” Nassetta said.
Dive Insight:
In the U.S., group RevPAR was particularly strong, growing 5% year on year, due to heightened demand for both corporate and social meetings. Business transient RevPAR grew 2% with growth from both large corporates and small- and medium-sized businesses. Leisure RevPAR, meanwhile, continued to normalize, declining modestly from its post-pandemic peaks.
In Q4, Nassetta said Hilton expects RevPAR growth “largely in line with the third quarter, driven by strong group bookings, continued business transient recovery and favorable calendar shifts, partially offset by the election and ongoing labor disputes in the U.S.”
Some 4,400 Hilton, Hyatt Hotels and Marriott International employees were on strike as of Wednesday. Hilton properties where union workers are off the job include Hilton Boston Park Plaza, Hilton San Francisco Union Square and Hilton Hawaiian Village, which is Hawaii’s largest hotel. Earlier this month, guests at the Honolulu hotel staged a protest due to service disruptions at the property, according to Island News.
On the development front, Hilton opened more hotel rooms “than any other quarter in the history of our company” in Q3, surpassing 8,000 hotels in Hilton’s overall system, Nassetta shared. This was led by the openings from Hilton’s newly launched Small Luxury Hotels of the World partnership, as well as “continued momentum from Spark,” the hotel company’s conversion-focused premium economy brand. Hilton opened more than 20 Spark hotels in the quarter across the U.S., U.K. and Canada.
The company also continued to expand its lifestyle portfolio in the quarter, opening its first two Graduate Hotels properties — Graduate Auburn and Graduate Princeton — since acquiring the brand in March.
Going forward, Nassetta said Hilton “feels pretty good” about 2025, noting the U.S. economy “remains strong, resilient, showing positive growth,” and “next year will be more of that.” Nassetta predicted business transient demand will likely surpass prior 2019 peaks in 2025.
Globally, business travel spend is expected to surpass pre-pandemic levels this year, according to a report this month from the World Travel & Tourism Council.
