Strong Group Demand Drives Growth for Hilton, Marriott
Surging group demand in the lodging space was a key factor in strong earnings reports this week for both Hilton Worldwide and Marriott International. At Hilton, systemwide group revenue was up by 6.8 percent in the first quarter, which president and CEO Christopher Nassetta in an earnings call said was supported by strong demand, "especially from small groups and company meetings." The group revenue increase outdid that of transient, which grew by 6.3 percent. "We expect group business strength will continue," added Nassetta, "particularly in the seasonally stronger second quarter, which is also showing solid growth." Overall revenue per available room was up by 6.6 percent for the quarter, and occupancy reached 71 percent systemwide.
At Marriott, group revenue per available room at full-service hotels in North America rose by more than 5 percent for the quarter, according to executive vice president and CFO Carl Berquist, due in large part to higher room rates. "Demand from smaller groups was particularly strong," he added. The group effect was felt even at the company's limited-service brands in North America, which experienced a systemwide RevPAR gain of more than 8 percent. Small group demand was partially responsible for that growth at the Courtyard flag. Marriott expects strong group RevPAR to help drive gains for the remainder of the year, with the group booking pace for the remainder of 2015 up by about 4 percent over last year. Berquist cautioned, however, that group business in the third quarter will face some challenging year-over-year comparisons to a particularly strong third quarter in 2014. Marriott expects overall systemwide RevPAR to increase by 5 to 7 percent this year.