Hilton predicts it'll take between 2 and 3 years for hotels to bounce back after coronavirus pandemic
The company lost $432 million in the second quarter
Hilton Worldwide Holdings Inc. announced on Thursday that it expected it to take at least two years for the hotel chain to rebound after the coronavirus pandemic.
The company based in McLean, Va., lost $432 million in the second quarter, as occupancy rates began to lift from dismal lows after hotels began to reopen and coronavirus restrictions were lifted around the world.
Hilton President and CEO Christopher Nassetta said in a conference call Thursday with investors that global hotel occupancy is now running around 45%, just three months after hitting 13% in mid-April.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| HLT | HILTON WORLDWIDE HOLDINGS INC. | 251.83 | +1.69 | +0.68% |
“I think about the shape of the recovery so far, which has gone from a low of a little over 10% to now running 45% and moving our way up to 50%,” Nassetta said, according to Reuters. “While those are still terrible numbers, that is a lot of improvement over a relatively short period of time.”
Hotel occupancy in the U.S. has more than doubled since April, reaching about 48.1% as of July 25, Reuters reported, citing data from hospitality data and consulting firm STR.
Occupancy averaged 22% worldwide within that time frame, down 56% from the same period a year ago. Occupancy levels were highest in Asia, at 29%, and the lowest in Europe, at 7%. U.S. occupancy levels averaged 24%. Tourism in beach towns like Norfolk, Virginia, has recovered more quickly in the U.S. than cities like New York and Seattle, according to STR, a hospitality data and consulting firm.
As demand gradually rebounds to pre-coronavirus levels, Nassetta said he expected it to take between two to three years for Hilton to completely recover from the pandemic. He expected the hotel chain may get a boost from an extended leisure travel season because kids may not be in school and work is more flexible right now. Some colleges are also booking hotel rooms to expand dorm capacity, he said, while workers are booking rooms to serve as remote offices.
The company announced layoffs of about 2,100 people, 22% of its corporate workforce, in June, and it extended previously announced furloughs and corporate pay cuts for 90 days.
The adjusted loss of 61 cents per share was far worse than the 31 cents projected on Wall Street, according to a survey of analysts by FactSet. Hilton’s revenue plunged 77% to $564 million in the April-June period. Analysts had expected sales of $819 million.
Revenue per available room, a key measure, plunged 81% to $21.67. One issue: Business is stronger at lower-priced brands like Hampton and Hilton Garden Inn than more expensive properties like Waldorf Astoria hotels. That will eventually change, Nassetta said, but for now, there is pressure on pricing.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
“People are going to expect a bargain for everything," he said.
A fifth of Hilton's hotels had to close at some point in the last six months, Nassetta said. As of July 31, 96% of its 6,100 hotels were open worldwide. To entice travelers, Hilton recently launched CleanStay, a cleaning program it developed with Lysol and the Mayo Clinic.
The Associated Press contributed to this report.