Hilton lifts profit view as international travel offsets weak US demand

(Reuters) – Hotel operator Hilton Worldwide raised its forecast for 2024 profit after beating second-quarter estimates on Wednesday as robust demand for international travel offset losses from normalizing domestic travel in the U.S.

It expects full-year profit between $6.93 and $7.03 per share, compared with its previous forecast of $6.89 to $7.03.

Travel companies have been benefiting from a sustained rise in international travel as tourists flock to destinations in the Middle East and Europe.

Internationally, quarterly revenue per available room (RevPAR) grew 3.5%, led by 10.7% growth in the Middle East and Africa, and 6.7% in Europe.

RevPAR in the U.S. grew at a sluggish 2.9%, as Americans grew cautious about travel spending in an increasingly uncertain economy. The rest of the Americas gained 6.5% during the quarter.

Hilton lowered its 2024 RevPAR growth forecast to a range of 2% to 3%, compared with its previous forecast of 2% to 4%.

“Given the softness and concerns in the macro outlook generally, we expect greater-than-normal scrutiny of guidance reductions,” said Jefferies analyst David Katz.

Shares of the company were down 1.2% before the bell.

Hilton’s room development pipeline increased to 508,300 rooms at the end of June, from 472,300 rooms in the prior quarter.

The Virginia-based company also raised its net unit growth (NUG) projection to between 7% and 7.5%, from a previous range of 6% to 6.5% to reflect its acquisition of Graduate Hotels in March.

Graduate Hotels marked the company’s first brand acquisition in over two decades as demand pressures in the U.S. hotel industry create opportunity for consolidations.

Quarterly adjusted profit came in at $1.91 per share, compared with Wall Street estimates of $1.86 per share.

Total revenue for the quarter ended June 30 was $2.95 billion, nearly 11% higher than analysts’ estimates of $2.93 billion, according to LSEG data.

(Reporting by Aishwarya Jain; editing by Devika Syamnath)