Hilton Sees Gains from Direct Booking
Three months after launching a campaign intended to get guests to book direct with the promise of lower room rates and free Wi-Fi, Hilton Worldwide reported growth in bookings through Hilton.com and its mobile app.
“We have global scale in a business where scale matters and are using it to drive a more direct relationship with all of our customers,” CEO Christopher Nassetta said during the company’s quarterly earnings call on Wednesday. “The business we received through web direct is higher than it’s ever been and is growing faster than ever, thanks to increasing share shift. The share of web direct channels in our distribution mix is growing five times that of the [online travel agency] share of growth in the quarter.”
Nassetta said HHonors enrollment since the launch of its direct booking campaign increased almost 90 percent, and HHonors occupancy hit a record 55 percent during the first quarter, a 4-point year-over-year increase.
Hilton’s decision to market direct booking through its loyalty program as a way for guests to gain perks like free Wi-Fi and online check-in has led other lodging players to follow suit. Marriott this month began adding Marriott Rewards member rates to its website that are lower than retail rates. Hyatt last week announced a similar initiative, tying lower rates and complimentary amenities to direct bookings made on Hyatt.com or through its app.
One travel manager, who preferred not to be identified, noticed the new Marriott rates and expressed concern about the growing trend from hoteliers. “It confirms my suspicions that the sales teams are not working close enough with [the loyalty teams] to protect the integrity of the corporate rates offered,” the travel manager said. “I am almost convinced that they are trying to take our travelers from our managed programs and push them right into their own Brand.com. This tactic may seem good right now, but long-term I think they will hurt themselves as they hurt the relationship between the buyer and supplier.”
Hilton’s Q1 Results
Hilton reported positive metrics for the first quarter despite softening occupancy and corporate transient demand.
Average daily rate increased 2.5 percent year over year to $141.62. Occupancy dropped 0.3 percentage points year over year to 70.2 percent. Weakness in business transient growth caused a 60 basis point drag on occupancy, CFO Kevin Jacobs said.
“The best visibility we have on the demand side continues to be in the group business segment, which remains healthy,” Nassetta said. “We have less visibility in the transient segment, which makes up the largest portion of our business and historically tracks more closely [than group] with macro-indicators, such as GDP growth. We did see strong U.S. booking pace across all segments and channels, in the month for the month of April, particularly in corporate transient.”
Group room revenue increased almost 4 percent year over year during the quarter in Hilton’s Americas owned and managed portfolio. Hawaii and San Francisco were the two top markets for year-over-year group revenue growth, Jacobs said, and the company benefited from corporate meetings.
Hilton opened 67 hotels, comprising a total of more than 9,200 rooms, during the quarter. Its global portfolio currently stands at 4,615 properties. Hilton cited significant interest in its new Tru by Hilton brand, first unveiled in January. Nassetta said the company currently has 48 hotels in the pipeline and 170 more deals committed or in-progress.
Hilton’s total first-quarter revenue increased to $2.75 billion from $2.6 billion last year.
(This was article was originally in www.businesstravelnews.com)