Third Quarter results are coming in for hotels, and things are looking up for the hospitality sector - with revenue boosts coming from some unexpected sources.
Hotel giant Marriott International reports its Q3 results 03NOV. But both Accor and Hilton hotel groups have already released their Q3 results, and they should give the travel industry some optimism about recovery.
Accor - Leisure Travel Growing
Accor’s revenues in the third quarter of this year are reportedly up nearly 80 per cent over 2020, to over $680 million USD. That’s still down 40 per cent from 2019, but the trajectory is in the right direction.
The company’s chairman and CEO, Sébastien Bazin, credited an uptick in summer leisure travel, especially in Europe and the Americas. "These trends are expected to persist out to the end of the year," he said.
When it comes to certain metrics like revenue per available room, occupancy and average daily rates, Accor saw some improvements over even this year’s second quarter - but still down from Q3 in 2019 before the pandemic.
Hilton - Surprising Revenue Boost from Small and Medium-Sized Business Travel
Hilton has a much more interesting story to tell for its third quarter.
The company is reporting actual profits of $240 million USD in Q3, which Skift points out is its second consecutive quarter of profitability.
In another piece of good news, Hilton’s room rates in the third quarter were just 2.5 per cent below the same quarter in 2019 before COVID.
Leisure bookings are definitely part of the reason for those positive results, with CEO Chris Nassetta describing them as “off the charts.”
He said Hilton saw 85 to 90 per cent occupancy on weekends in the U.S. market - and that drove rates above 2019 levels.
“I do think that leisure pricing power will continue because I believe leisure demand will remain at elevated levels,” he says.
But here’s the twist.
The post-pandemic outlook for business travel, so often replaced by virtual meetings, hasn’t always been bright.
But Hilton is pointing to high demand for business travel bookings from small and medium enterprises (SME’s) as part of its rebound to profitability.
According to Skift, Hilton’s focus on winning travel business from SME’s rather than big corportate contracts even before the pandemic, “has translated into a faster recovery during the pandemic. Many of these businesses don’t have the luxury of being able to entirely work remotely and had to stay on the road and work in person.”
Nassetta claimed 70 percent of U.S. businesses are now “back on the road”, and demand from SME’s is “only five to 10 percent off 2019 levels.”
“Business transient will continue to move up,” Nassetta said on an investor call. “You have the big corporates, which are 40% off, but then you have small and medium, which are only maybe 5 to 10% off ... and they are less price sensitive.”
That’s why we were working so hard on accessing more of that demand base pre-COVID, and it has helped us during COVID.”
Nassetta said Hilton would continue to focus on the SME segment of business travel as travel recovery continues.
