Hilton Worldwide's second-quarter business transient revenue per available room dropped 2 per cent year on year, but CEO Christopher Nassetta said on a Wednesday earnings call that the company is seeing "really early" signs of a rebound outside of US government travel.
Nassetta pointed to "government spending declines, weaker international inbound business and broader economic uncertainty," along with a shift in the Easter holiday from 2024 to 2025 as key drivers in the RevPaR decrease, as corporates paused travel amid economic turbulence following the introduction and in some cases postponement of a new suite of US tariffs.
But Nassetta noted that "while it's early in the third quarter, we have seen a pickup in non-government business demand," citing the optimism expressed by US airlines that have reported Q2 results.
"The green shoots … are what we're seeing in booking behaviour on the group side and what we're seeing very recently on the corporate business transient side, which is saying that the 'wait and see,' it's thawing," Nassetta said. "The freeze of April, May and to a degree June, we're starting to see a thaw, but it's really early."
Nassetta also cited "favourable trends in company meetings" as a source of optimism regarding corporate demand. "We did see positive momentum in lead volumes from corporates with month-over-month sequential growth throughout the quarter."
Hilton Q2 metrics
Hilton's systemwide second-quarter RevPaR declined 0.5 per cent year on year to $121.79, somewhat below the "roughly flat" projection for Q2 the company issued three months ago.
"The quarter turned out to be a bit noisier than expected," Nassetta said.
Hilton's systemwide second-quarter occupancy declined 0.5 percentage points to 74.4 per cent, and average daily rate increased 0.2 per cent to $163.78.
In Europe, RevPaR increased 2 per cent year on year to $137.16, while occupancy increased 0.8 percentage points to 77.2 per cent, and average daily rate increased 0.9 per cent $177.64.
Meanwhile the US saw RevPaR decline 1.5 per cent year on year to $131.66, while occupancy declined 1 percentage point to 75.8 per cent, and ADR declined 0.2 per cent to $173.61.
Hilton projected third-quarter RevPaR on a currency-neutral basis would range from flat year on year to "modestly down," and projected full-year RevPaR to range from flat to an increase of 2 per cent.
Total second-quarter revenue increased more than 6 per cent year on year to more than $3.1 billion.
Hilton's development pipeline at the end of the second quarter totalled 510,600 rooms, up 4 per cent from the year prior.
During the second quarter the company opened 221 hotels, including the Sax Paris under its LXR Hotels & Resorts brand, The Marcus Portrush in Northern Ireland and the Hotel Astoria Vienna.