“We’re not crying in our milk”: Hilton eyes new hotels despite $432M loss in Q2

Hotel giant has 414,000 new rooms in the pipeline

National /
Aug.August 06, 2020 06:45 PM
Hilton CEO Chris Nassetta (Getty, iStock)

Hilton CEO Chris Nassetta (Getty, iStock)

Hilton Worldwide Holdings pressed on with developing new hotels despite heavy losses last quarter.

The hotel giant opened 60 hotels with 6,800 new rooms last quarter despite reporting a net loss of $432 million in the second quarter. That’s down almost 66 percent from its net income of $261 million during the same period 2019. Still, the company grew its pipeline by 11 percent year over year to 414,000 rooms, executives said on a Thursday earnings call.

CEO Chris Nassetta called the expansion of Hilton’s development activity a “pleasant surprise” that reinforces his view that hotel demand will return to 2018 to 2019 levels in about three years.

“We’re not crying in our milk. We’ve got a business to run,” he said. “This too shall pass.”

Nassetta also said Hilton is working closely with hotel owners on Hilton-managed properties to identify “significant savings” to all its brands’ operating cost structures. When asked if cost savings measures may include permanently suspending housekeeping services, he said “everything’s on the table.”

“We have owners that are really hurting,” he continued. “No business was built for no revenue.”

Some owners have sold hotels at deep discounts, or agreed to high interest rates on loans in order to secure cash amid uncertainty over ongoing government relief. Others have begun converting rooms into office space or remodeling properties into a members’ only clubs. Nassetta said Hilton has been doing deals with “dozens and dozens” of universities to convert limited service rooms into dormitories.

The majority of Hilton hotels are franchise properties, with under 1,000 hotels managed by Hilton and just 65 owned or leased by Hilton itself. Hilton’s revenues from all properties are down 77 percent year over year to $564 million from nearly $2.5 billion in 2019.

Revenue per available room worldwide fell 81 percent year over year for the period. In the U.S., the occupancy rate across Hilton hotels was 24 percent with RevPAR of $24.68 and an average daily rate of $101.17.

One in five of all Hilton’s hotels were closed at some point during the first six months of 2020, though the company said 96 percent were open as of July 31.

Write to Erin Hudson at [email protected]


Related Articles

arrow_forward_ios
Midtown DoubleTree sells at staggering loss
Midtown DoubleTree sells at staggering loss
Midtown DoubleTree sells at staggering loss
(iStock/Photo Illustration by Steven Dilakian for The Real Deal)
Jobs in warehousing and storage above pre-pandemic levels; hospitality showing strong recovery
Jobs in warehousing and storage above pre-pandemic levels; hospitality showing strong recovery
Shuttered Murray Hill hotel to become transitional housing (Google Maps)
Shuttered Murray Hill hotel to become transitional housing
Shuttered Murray Hill hotel to become transitional housing
Dorado Beach Hotel with Braemar Hotels & Resorts Inc. CEO Richard J. Stockton (Braemar, Ritz Carlton)
Dallas hotel REIT to buy Ritz-Carlton Reserve in Puerto Rico for $187M
Dallas hotel REIT to buy Ritz-Carlton Reserve in Puerto Rico for $187M
St. Barts court quashes proposed $170M hotel
St. Barts court quashes proposed $170M hotel
St. Barts court quashes proposed $170M hotel
45 West 81st Street (Google Maps)
Shuttered Excelsior Hotel sold for $80M
Shuttered Excelsior Hotel sold for $80M
Texas district judge’s decision moves forward disputed $77M World Class sale
Texas district judge’s decision moves forward disputed $77M World Class sale
Texas district judge’s decision moves forward disputed $77M World Class sale
New York City hotel occupancy hit pandemic record, but new cases loom
New York City hotel occupancy hit pandemic record, but new cases loom
New York City hotel occupancy hit pandemic record, but new cases loom
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...