Hilton Worldwide Holdings reported its second quarter 2020 results on Thursday, with the company saying it expects its room occupancy rates to improve by 5% by early fall. Hilton also said it predicts demand to rebound to pre-coronavirus levels by 2022, according to Reuters. Leased hotels in Europe were the primary driver of the second quarter earnings shortfall.
According to analysis from Baird Equity Research, Hilton’s second quarter-earnings fell short of expectations, especially concerning a loss within the owned and leased segment, for which RevPAR growth was -96% versus the firm’s -86% estimate. Baird also noted that it views Hilton’s second quarter update as “relatively straightforward,” with franchise fees performing in line with expectations.
The following “reflect the material impact that the coronavirus pandemic had on Hilton’s business,” according to the company. Highlights include:
- Revenue plunged 77.3% to US$564 million, below estimates of US$848.7 million
- Net loss was US$432 million for the second quarter
- Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was US$51 million for the second quarter
- System-wide comparable RevPAR decreased 81% on a currency neutral basis for the second quarter from the same period in 2019
- Approved 18,400 new rooms for development during the second quarter, growing Hilton’s development pipeline to 414,000 rooms as of June 30, representing 11% growth from June 30, 2019
- Opened 6,800 rooms in the second quarter, contributing to 5,500 net additional rooms in Hilton’s system
- As of July 31, 96% of Hilton’s system-wide hotels were open
- Launched Hilton CleanStay, a new program created to deliver an elevated standard of cleanliness and disinfection to properties worldwide, and Hilton EventReady, which focuses on cleanliness and customer service specific to meetings and events
- Announced a new strategic partnership with Country Garden to develop 1,000 Home2 Suites by Hilton in China, representing the first major extended stay offering for Hilton outside of North America