Hotel operator Hilton Worldwide on Wednesday reported a rise in fourth-quarter revenue as demand for group and conventional business travel surged.
Total quarterly revenue was $2.61 billion (€2.42 billion), up 6.75% from a year earlier.
Hilton Worldwide on Wednesday forecast full-year profit that fell short of lofty market expectations as travel demand normalises after beating analysts' estimates for fourth-quarter earnings.
US hotel operators benefited from pent-up leisure travel demand in the years following the pandemic but this quarter Hilton said it benefited from higher licensed fees and the recovery of group and convention travel.
"Deceleration is natural after a few strong years of growth recovery. Travel demand has normalised not weakened," said Morningstar analyst Dan Wasiolek.
The company expects full-year revenue per available room (RevPAR), an important metric in the hospitality industry, to rise between 2% and 4% in 2024, down from a 12.6% increase in 2023.
Shares of the company were up 1.2% in early afternoon trading.
Hilton, which owns brands such as Waldorf Astoria Hotels & Resorts, forecast 2024 adjusted profit of between $6.80 and $6.94 per share, while analysts were expecting $7.07.
"The market has a very high level of expectations for outlooks and is rewarding few for great earnings," said Sylvia Jablonski, chief investment officer of Defiance ETFs.
Room revenue rose 5.7% in the fourth quarter from a year earlier to $107.69, led by higher occupancy levels in Asia Pacific and higher room rates in the Middle East and Africa.
Diverse Brand Portfolio
Hilton has shown the ability to leverage its global presence and diverse brand portfolio despite the overhang from COVID-19 and geopolitical concerns, Jablonski said.
Management and franchise fee revenue rose 12.2% during the quarter.
"Our performance was driven by better-than-expected fee growth, largely due to better-than-expected RevPAR performance and licensed fee growth," chief financial officer Kevin Jacobs said on a post-earnings call.
Leisure demand in the US was flat with difficult year-over-year comparisons, the company said.
Meanwhile, total expenses jumped 13.8% to $2.2 billion (€2.2 billion) in the fourth quarter.
Projected Net Growth
Hilton projected 2024 net unit growth to be between 5.5% and 6.0%, compared with a year earlier.
Rival Marriott International is scheduled to report its results next week.