Dive Brief:
- Hilton reported third-quarter system-wide RevPAR exceeded company expectations on Wednesday, with CEO Chris Nassetta attributing strong performance to improved demand across all segments and regions.
- As a result, Hilton raised its guidance for fourth-quarter growth. Nassetta anticipates performance in Q4 to be driven partially by strength in group bookings, with the company’s group RevPAR outperforming leisure and business transient RevPAR growth in Q3.
- Looking forward, Hilton expects its growing pipeline — which is currently the largest in the company’s history, Nassetta shared in an earnings call with analysts — will fuel further growth, particularly as newly launched brands Spark by Hilton and the unnamed Project H3 get off the ground.
Dive Insight:
Hilton’s third-quarter RevPAR, adjusted EBITDA and adjusted earnings per share were all above the high-end of the company’s guidance ranges, with system-wide occupancy at its highest level since 2019. But where the quarter really shined was in development. After a “near-record 35,500 rooms” signed in the quarter — an increase of 80% year-over-year, according to Nassetta — the company pipeline is now the largest in Hilton’s history.
Of those signings, 35% were conversions. In an earnings call with analysts, Nassetta hinted that Hilton would soon announce and open a 1,000-room conversion property in the U.S. The third quarter was also strong for ground-up developments, with the U.S. market posting its strongest quarter of construction starts since Q1 of 2020.
In the premium economy segment, Hilton celebrated the opening of its first Spark by Hilton hotel in the third quarter in Mystic, Connecticut. “Opening just eight months after launch, Spark is the fastest announcement-to-market brand in Hilton's history,” Nassetta said, adding that the brand has more than 400 deals in negotiation.
Hilton’s extended stay brand Project H3, which was announced earlier this year and has yet to get a formal name, has 350 deals in negotiation. The first-ever property under the brand will open in Kokomo, Indiana, in late summer 2024.
A significant portion of other planned openings are in Hilton’s expanding lifestyle hotel space. The company opened its 300th lifestyle hotel in Q3, which also saw the launch of the Tempo by Hilton brand in Times Square.
