Hilton Worldwide sees softer US leisure travel hitting 2024 profit

Feb 7 (Reuters) – Hotel operator Hilton Worldwide on Wednesday forecast 2024 profit below market expectations on higher expenses and signs of softening demand for leisure travel in the United States.

The shares were down 2.8% in premarket trade.

Hilton and other hotel operators have benefited from pent-up travel demand in the years following the pandemic, but now rising demand for other forms of travel like cruises as well as elevated room rates are softening demand for hotels in the U.S.

“We delivered another year of strong top- and bottom-line results and continued to deliver on our robust development story,” said CEO Christopher Nassetta.

Hilton, which owns brands such as Waldorf Astoria Hotels & Resorts, said its fourth-quarter revenue per available room, or RevPAR, an important metric in the hospitality industry, rose 5.7% from a year earlier to $107.69.

System-wide occupancy levels rose by 2 percentage points to 69% in the fourth quarter. Average daily rates, or nightly room rates, grew 2.7% to $156.07 over the same period.

Management and franchise fee revenues rose by 12.2% in the quarter, compared to the same period in 2022.

The company expects a full-year adjusted profit of between $6.80 and $6.94 per share, below analysts’ expectations of $7.07 per share, according to LSEG data.

Hilton expects 2024 revenue per room to increase between 2% and 4% compared to last year. It sees full-year net income of between $1.69 billion to $1.72 billion.

Fourth-quarter revenue rose 6.75% to $2.61 billion, which marginally missed Wall Street estimates.

But adjusted per-share earnings of $1.68 were above estimates of $1.57.

Rival Marriott International will report its results next week.