“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

TRD New York /
Aug.August 06, 2020 05:45 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
Mayor Lori Lightfoot and Hotel 166, which is among the five hotels housing frontline workers and coronavirus patients through a program the city is funding. (Credit: Getty Images; Google Maps)

City’s bill mounts for Covid-related hotel housing but many rooms sit empty

City’s bill mounts for Covid-related hotel housing but many rooms sit empty
The Godfrey Hotel in the Loop (Credit: Google Maps)

Chicago hotels have a pitch for quarantined office workers

Chicago hotels have a pitch for quarantined office workers
Unite HERE is calling on hotel operators, like the one that owns Hilton Chicago, to keep paying its laid-off workers. (Credit: Lymantria via Wikipedia Commons/Flickr)

Hotel union to operators: You can afford to pay those laid-off workers

Hotel union to operators: You can afford to pay those laid-off workers
 Palmer House at 17 E. Monroe Street (Credit: Hilton, iStock) 

Covid-19 crisis could wipe out these debt-laden Chicago hotels

Covid-19 crisis could wipe out these debt-laden Chicago hotels
Governor of Illinois J. B. Pritzker (Credit: Joshua Lott/Getty Images)

State offers lifeline to devastated hospitality industry

State offers lifeline to devastated hospitality industry
Founder, President and CEO of Oxford Capital Group John Rutledge with Hotel Felix and Hotel Julian (Credit: Oxford Capital Group, Hotel Felix and Google Maps)

Oxford Capital designates 5 of its Chicago hotels for coronavirus housing program

Oxford Capital designates 5 of its Chicago hotels for coronavirus housing program
The 21c Museum Hotel at 55 E Ontario Street and the Hilton at 720 S. Michigan Avenue (Credit: Google Maps)

More hotels fall victim to coronavirus pandemic

More hotels fall victim to coronavirus pandemic
Mayor Lori Lightfoot & Hotel One Sixty-Six Magnificent Mile at 166 E. Superior St. (Credit: KAMIL KRZACZYNSKI/AFP via Getty Images, Google Maps)

Chicago will foot bill for 2K hotel rooms to isolate those with coronavirus

Chicago will foot bill for 2K hotel rooms to isolate those with coronavirus
arrow_forward_ios

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

Loading...