Powered by gains in business transient and small corporate group revenue, Hilton Worldwide on Wednesday (7 February) reported an overall fourth-quarter year-over-year revenue per available room increase of 5.7 per cent.
The company also announced a loyalty partnership with London-based boutique hotel collection Small Luxury Hotels of the World.
Fourth-quarter business transient RevPAR increased 4 per cent year over year on higher occupancy and rates, Hilton president and CEO Christopher Nassetta said on Wednesday during an earnings call. The gains again were led by small and midsized enterprises, he said, but noted that larger companies were recovering too.
"The big corporates finished the year still a bit off, probably 5 per cent off of where they were but still growing," Nassetta said. "Most segments were relatively strong and either back to or beyond prior to pandemic levels, with the exception of probably banking, technology and consulting, which were less. But blended together, they weren't that far off."
SMEs accounted for about 85 per cent of Hilton's business transient mix, as well as a "meaningful and growing percentage of our group mix," he said, and that segment's RevPAR has surpassed pre-pandemic levels.
In Q4, "from a RevPAR point of view, business transient was ahead, but from an occupancy point of view was still a bit behind," Nassetta said. "We do think that by the time we finish this year, assuming the broader consensus view of a reasonably soft landing … we think will be at more normalised levels of demand."
"Thousands" of organisations have registered for the company's Hilton for Business rewards program, designed for SMEs, since it was unveiled in January, he said.
Small company meetings helped Hilton's fourth-quarter group RevPAR increase 6 per cent year over year, Nassetta said, and the sector remains red-hot. "Demand is really strong, he said. "Every quarter is the next new high-water mark in terms of bookings for all future periods."
Q4 metrics and 2024 outlook
Hilton's systemwide fourth-quarter average daily rate was $156.07, up 2.7 per cent year over year. Overall, occupancy increased 2 percentage points to 69 per cent and RevPAR increased 5.7 per cent to $107.69. In Europe, occupancy increased 2.2 percentage points to 72.7 per cent and RevPAR for the quarter saw a 9.7 per cent increase to $116.50.
Total fourth-quarter revenue increased 6.7 per cent to $2.6 billion. Net income was $150 million, compared with $333 million in the fourth quarter of 2022.
Hilton's development pipeline at the end of the fourth quarter comprised 462,400 rooms, a record and an 11 per cent increase year over year.
The company projected year-over-year increases in first-quarter and full-year 2024 RevPAR of 2 per cent to 4 per cent.
SLH partnership
Hilton also announced a partnership with Small Luxury Hotels of the World in which customers will be able to book through Hilton channels participating properties in the boutique hotelier's 560-property collection, and Hilton Honors loyalty programme members will be able to earn and redeem loyalty points. Hilton said the partnership would "ramp up in the months ahead."
While many SLH properties are in resort locations, a number are in urban locations, Nassetta said, and "I think business transient will be a meaningful component of it, particularly in those hotels in the right locations."
SLH formerly had formed a similar loyalty alliance with Hyatt Hotels Corp., but a Hyatt spokesperson confirmed to Business Travel Europe affiliate BTN that the companies had "mutually made the decision to end our relationship with SLH in the near future," though World of Hyatt loyalty programme members still can book participating SLH Hotels on Hyatt booking channels.
Hyatt in 2024 plans to integrate boutique properties listed in Mr & Mrs Smith, the London-based booking platform it acquired last year, according to the spokesperson.