Hilton’s second quarter showed soft demand in U.S. hotels, with a 0.5% decrease in revenue per available room (RevPAR). However, the company remains confident in its expansion plans, forecasting flat to slightly negative RevPAR in the third quarter and improvement in the fourth quarter.
Policy uncertainty in Washington impacted hotel bookings, especially by leisure travelers and large corporations. Despite this, Hilton expects better growth in the U.S. economy, which should drive stronger travel demand and revenue per available room growth, as industry supply growth remains low.
Leisure travel grew by 1% due to an extended spring break period, while business travel declined by 2% because of reduced government spending and economic uncertainty. Group bookings stayed flat, with corporate meetings offsetting weakness in convention business and social events.
Hilton reported positive momentum in corporate lead volumes and an increase in group bookings for 2026 and 2027. The company’s hotel development pipeline hit a record high, but the pace of openings has slowed, leading to uncertainty about achieving the 6-7% net unit growth target.
Despite the challenges, Hilton generated a net income of $442 million on $1.3 billion in revenue in the second quarter. Adjusted EBITDA grew by 10% to $1 billion. Hilton Honors continues to perform well with over 226 million members, evenly split between U.S. and international travelers.
Looking ahead, Hilton anticipates adding 2-3 more brands, possibly in the upscale lifestyle segment. The company is confident in hitting its target range for hotel development, with plans to increase starts on hotel projects by 16-17% this year. 1. The U.S. economy added 943,000 jobs in July, exceeding expectations. The unemployment rate fell to 5.4%, the lowest since March 2020. Job gains were seen in leisure and hospitality, professional and business services, and transportation. This indicates a strong recovery as businesses continue to reopen.
2. Pfizer and Moderna have received full FDA approval for their COVID-19 vaccines. This could lead to increased vaccination rates as some people were waiting for full approval before getting vaccinated. The vaccines have been shown to be safe and effective in preventing severe illness and death from the virus.
3. The Tokyo Olympics have come to a close with the United States leading in total medals with 113. China and Japan followed closely behind. Notable performances included Simone Biles’ return to competition and Team USA’s dominance in swimming and track and field. The games were held under strict COVID-19 protocols.
4. The IPCC released a report warning of irreversible climate change impacts. The report states that human activities are causing unprecedented warming, leading to more extreme weather events. Urgent action is needed to reduce greenhouse gas emissions and limit global warming to 1.5 degrees Celsius to avoid catastrophic consequences.
Read more at Yahoo Finance: Flat Quarter, ‘Green Shoots,’ More Brands to Come