“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

New York /
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
(Facebook via Hotel Astor Miami Beach)
Shuttered Hotel Astor in Miami Beach gets a new owner
Shuttered Hotel Astor in Miami Beach gets a new owner
Miami allegedly granted improper height increase for Design District hotel project: lawsuit
Miami allegedly granted improper height increase for Design District hotel project: lawsuit
Miami allegedly granted improper height increase for Design District hotel project: lawsuit
The Fairwind Hotel and Joseph Chetrit (Getty, Fairwind)
Chetrit Group sells Miami Beach hotel for $42M
Chetrit Group sells Miami Beach hotel for $42M
Renderings of the project Courtesy of Pebb Capital
JV plans high-end offices at old Bancroft Hotel in South Beach
JV plans high-end offices at old Bancroft Hotel in South Beach
JHSF's Fábio Auriemo with Como Metropolitan Miami Beach hotel (Susan Gale Group / One Sotheby’s International Realty)
Brazilian real estate giant JHSF buys oceanfront Miami Beach hotel, plans first Fasano
Brazilian real estate giant JHSF buys oceanfront Miami Beach hotel, plans first Fasano
The Variety Hotel (Getty)
Lender acquires Variety Hotel in Miami Beach following foreclosure suit
Lender acquires Variety Hotel in Miami Beach following foreclosure suit
Branden Muhl, James Vosotas and Hotel Greystone at 1920 Collins Avenue, Miami Beach (Google Maps, Mahaska, Trans Inns)
Hotel Greystone to reopen in September amid partnership break-up
Hotel Greystone to reopen in September amid partnership break-up
The 5-to-0 vote last week will prevent property owners in a large chunk of residential South-of-Fifth from converting their buildings into apartment hotels (iStock)
Miami Beach bans new apartment hotels in parts of South-of-Fifth — for now
Miami Beach bans new apartment hotels in parts of South-of-Fifth — for now
arrow_forward_ios

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

Loading...