Hilton CEO Optimistic About The Future of Travel

Christopher Nassetta
President & CEO, Hilton

On May 5, Hilton Worldwide Holdings held their 2021 Earnings Call in which president & CEO Christopher J. Nassetta said he was pleased with their 1st quarter results and feels “very good about the momentum for the remainder of the year.”

He said, “In the first quarter, system-wide RevPAR decreased 38% year-over-year and 53% versus 2019. Rising COVID cases and tightening travel restrictions, particularly across Europe and Asia Pacific, weighed on demand through January and most of February. However, March marked a turning point as we lapped the start of the U.S. lockdowns, RevPAR turned positive up more than 23% year-over-year. System-wide occupancy reached 55% by the end of the month, driven by strong leisure demand. As expected, recovery in group and corporate transient continued to lag, but both segments showed sequential improvement versus the fourth quarter. Overall, this positive momentum has continued into the second quarter. While recovery varies by region and country, we can see the light at the end of the tunnel.”

Nassetta said as people in the U.S. continue to be vaccinated, they are seeing an increase in forward bookings and occupancy, as well as lengthening booking windows. Currently, it is at 60%. This momentum seems to be mirrored elsewhere in the world. For example, in China, it is 70%. “We are on pace to see record leisure demand in the U.S. over the summer months, with April bookings for the summer exceeding 2019 peak levels by nearly 10%. We also expect continued corporate office re-openings to drive a meaningful pickup in business transient demand towards the back half of the year,” he said.

“Based on what we’ve seen in China and pockets of the U.S., once restrictions are lifted and offices reopen, business travel returns,” he said. “In the first quarter, business transient revenue was roughly 75% of 2019 levels in states that were further along in their reopening process. Additionally, recent forecast for non-residential fixed investment is up more than three percentage points from prior projections to 7.8%, indicating even greater optimism around business spending.”

When it comes to groups returning, they are seeing an improvement month-over-month. “Group bookings made in the first quarter for the back half of the year were roughly flat with 2019 booking activity, suggesting customers are increasingly optimistic about safety measures and loosening pandemic restrictions. Near-term group bookings continue to be driven largely by social events and smaller group meetings, but we are seeing a slow shift back to a more normal mix of business with corporate group leads up more than 70% for future periods. Associations and trade shows have also started opening up housing and registration sites for events later this year, further signs of moving forward with in-person group meetings. As we look out to next year, our group position is roughly 85% of peak 2019 levels with rate increases versus 2019. Group bookings were up in the mid-teens for 2023 versus 2019,” said Nassetta.

“In fact, last week, I was in Mexico to chair the World Travel & Tourism Council’s Global Summit where more than 800 participants from all over the world attended in person and thousands more attended virtually. The conference demonstrated that it is possible to meet in a safe way and the hybrid events can be incredibly effective at expanding participation and enhancing collaboration. It was great to be in the same room with other hospitality and government leaders talking about the bright future that lies ahead for our industry. The event made me even more optimistic for our recovery and confident that we are beginning to see a new era of travel emerge,” he said.

He added, “Overall, I’m pleased with our first-quarter results and feel very good about the momentum for the remainder of the year. I’m optimistic for the future of travel and for Hilton as we emerge stronger and better positioned continuing to drive value for our guests, our owners, our communities, and of course, our shareholders.”

To see full transcript of Q1 Earnings Call, click here.