A Hilton hotel in The Hague, Netherlands, on April 30.Piroschka Van De Wouw/Reuters
Hotel operator Hilton Worldwide HLT-N raised its forecast for 2024 profit after beating second-quarter estimates on Wednesday as robust demand for international travel offset losses from slowing travel demand in the U.S.
The sector has been benefiting from a sustained rise in international travel as tourists flock to destinations in the Middle East and Europe, but many have warned of an impending slowdown as consumers grow cautious of spending.
Hilton’s international revenue per available room (RevPAR) grew 3.5 per cent for the quarter, led by 10.7 per cent growth in the Middle East and Africa, and 6.7 per cent in Europe.
However, RevPAR in the U.S. grew at a sluggish 2.9 per cent as economic uncertainty forced Americans to rethink their travel plans, sending shares of Hilton down 1.5 per cent.
Consumers spent all the money they saved during the pandemic and now they are borrowing more, Hilton CEO Christopher Nassetta said on an earnings call.
“They have less available, less disposable income and (less) capacity to do anything including travel,” he said.
Hilton lowered its 2024 RevPAR growth forecast to a range of 2 per cent to 3 per cent, compared with its previous forecast of 2 per cent to 4 per cent.
“Given the softness and concerns in the macro outlook generally, we expect greater-than-normal scrutiny of guidance reductions” from investors, said Jefferies analyst David Katz.
Hilton’s room development pipeline increased to 508,300 rooms at the end of June, from 472,300 rooms in the prior quarter.
The Virginia-based company also raised its net unit growth (NUG) projection to between 7 per cent and 7.5 per cent, from a previous range of 6 per cent to 6.5 per cent to reflect its acquisition of Graduate Hotels in March. It expects full-year profit between $6.93 and $7.03 per share, compared with its previous forecast of $6.89 to $7.03.
Quarterly adjusted profit came in at $1.91 per share, compared with Wall Street estimates of $1.86 per share.
Total revenue for the quarter ended June 30 was $2.95-billion, up 11 per cent from last year and higher than analysts’ estimates of $2.93-billion, according to LSEG data.