Hilton Says China Demand To Be Volatile Near-Term, Sees Gradual Recovery

By Dave Simpson
Hilton Says China Demand To Be Volatile Near-Term, Sees Gradual Recovery

Hilton Worldwide Holdings Inc expects demand for stays in China to be volatile in the near term due to rising COVID-19 infections, the hotel operator has said, but sees the key tourism market gradually recovering through the year.


"I mean the environment created a drag... before it was lockdown, now they reopen and everybody gets sick, but the net result is a drag on business activity," said Hilton's finance chief Kevin Jacobs during an investor call.

The comments came after Hilton missed its room growth expectations for 2022, pressured by the COVID environment in China, where restrictions were abruptly lifted after protests.

Hilton, which gets a sizeable chunk of its revenue from outside the United States, reported net unit growth of 4.7% in 2022, below its earlier forecast of about 5%.

"They probably for the first time in quite a while missed on unit growth blaming on China so that obviously one of the reasons that their unit growth has been a bit softer," Bernstein analyst Richard Clarke said.


China's strict COVID curbs had halted construction of some luxury properties and impeded travel to a key global tourism market. The country had been a black spot in an otherwise bright 2022 for the industry.

However, Hilton reported robust results for the fourth quarter ended 31 December, aided by strong travel demand despite mounting economic worries.

For the quarter, Hilton said revenue per available room, or RevPAR - a key metric for investors - rose 24.8% on a currency neutral basis from a year earlier.

Excluding items, Hilton earned $1.59 per share, beating analysts' expectations of $1.22 per share. Its revenues rose about 33% to $2.44 billion, compared with estimates of $2.38 billion, according to Refinitiv data.

Adjusted Profit Per Share Forecast

The company forecast an adjusted profit per share between $5.42 and $5.68 per share for 2023, compared with expectations of $5.60 per share.


Read More: Hilton Lifts Forecast As Profit Beats Estimates On Strong Travel Demand

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