Monthly Archives: April 2015

Hilton Earnings Up 22 Percent, Development Pipeline Surges

(Adapted by David Hogg from a 4/29/15 article by Jeff Clabaugh in the Washington Business Journal.  Congratulations to development partner Hilton Worldwide! – Dave Hogg)

Hilton Worldwide Holdings Inc. reported a 22 percent increase in earnings and has increased its development pipeline to more than 240,000 new rooms.

Hilton’s first-quarter revenue was $2.6 billion, compared with $2.4 billion in the same quarter a year ago. Net income was $150 million, or 15 cents per share, compared with $123 million, or 12 cents per share, in the first quarter of 2014.

Revenue per available room rose 6.6 percent.

Hilton opened 53 hotels in the first quarter, adding 8,000 rooms, and approved more than 23,000 new rooms. It says 56 percent of the 1,422 hotels now in development are in the U.S.

Hilton (NYSE: HLT) forecasts full-year revenue per available room growth of 5 percent to 7 percent.

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U.S. Hospitality Industry Firing on All Cylinders

Fairfield Inn & Suites, 651 W Areba Ave., Hershey, PA 17033(Adapted by David Hogg from a 4/24/15 article by Jan Freitag, Senior VP, Strategic Development, STR, in Hotel News Now)

The first quarter of 2015 finally brought what was expected for a while now: The 12-month-moving-average occupancy tied an all-time record of 64.9%, on par with the fall 1995. This means all key performance indicators (rooms available, sold, revenue, average daily rate, occupancy and revenue per available room) are now at all-time highs.

The dollar amounts are not inflation adjusted, but the industry is firing on all cylinders. I would expect more record breaking demand and revenue numbers for the foreseeable future. (All data is from STR, the parent company of Hotel News Now.)

1. More rooms sold this month than any March ever
Occupancy was the highest ever recorded in March (66.8%). The industry sold more than 100 million roomnights (another March record), which was 3.3 million room nights more than last year.

Compared to March 2007, the industry recorded 12 million more rooms sold. In short: Demand is strong, and the hotel industry is capitalizing on the healthy macroeconomic picture.

2. Average Daily Rate continues to accelerate
March 2015 results were slightly negatively affected by one less Saturday than in March 2014. Despite this, RevPAR grew a healthy 7.4%, driven by ADR growth of 5%.*

This is the second consecutive month in which ADR growth has accelerated over the previous month (January: +4.4%, February: +4.7%, March: +5%). It will be interesting to see if operators can continue this pace as we get into the spring meeting season.

RevPAR has now increased for 61 consecutive months (or five-plus years) with no end in sight.

3. Is sustained supply growth finally here?
Supply growth hit 1.1% in March. This is the second consecutive month that year-over-year number has increased 0.1%.

It will be interesting to see if we revise this number down next month or if this is indeed the long-awaited impact of the under-construction rooms opening up. If so, brace yourself for impacts on occupancy growth and eventually impacts on absolute occupancy in middle to late 2015.

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