THE FIRST HALF of 2019 ended on a high note for three of the world’s largest hotel companies. Marriott International and Hilton Worldwide Holdings reported strong second quarter results while InterContinental Hotel Group said it reached several expansion goals in the first half of the year.
IHG saw its net system size grow 5.7 percent in the first half of the year, its best first-half performance for openings and signings in more than a decade. That increase brought the company to more than 5,700 hotels and 856,000 rooms worldwide.
That is the culmination of strategic initiatives the company set 18 months ago to accelerate its growth, said IHG Global CEO Keith Barr in a statement to investors.
“Our approach is built around strengthening our established brands, adding new brands in high opportunity segments and optimizing our owner proposition,” Barr said. “In a slower RevPAR growth environment, we’ve made significant progress.”
Barr also said the company had launched new design prototypes for Staybridge Suites and Candlewood Suites and evolved the brand prototypes for Holiday Inn and Holiday Inn Express.
“We also developed six flagship properties for Crowne Plaza in the U.S., Europe and China and have continued to take Hotel Indigo and Kimpton Hotels & Restaurants to new markets,” he said. “Our new avid and voco brands are performing well, we’ve already had over 50 expressions of interest for our newest brand, Atwell Suites, and we’re well placed to capitalize on strong growth in the luxury segment with our recently acquired Six Senses and Regent brands.”
Barr also cited the company’s recent decision to replace individual plastic bottles of toiletries with bulk dispensers as an example of responsible growth.
Hilton’s system-wide comparable RevPAR grew 1.6 percent in the first six months of the year, said CEO Christopher Nassetta, who said the growth was driven by increases in ADR and occupancy.
The company’s management and franchise fee revenues increased 10 percent during the same time period as a result of RevP AR growth at comparable managed and franchised hotels of 1.6 percent, higher licensing and other fees, as well as the addition of new properties to Hilton’s portfolio.
The second quarter results exceeded the high end of guidance for adjusted EBITDA and diluted earnings per share, Nassetta said.
“We continued to experience meaningful market share gains during the quarter with increases across all brands and regions, further growing our industry-leading RevP AR index premium,” he said. “As we look to the remainder of the year, we think we are well-positioned to continue driving growth ahead of the industry .”
Marriott’s RevPAR increased 1.2 percent in the second quarter thanks to higher leisure transient demand in Europe, the Caribbean and South America as well as the Asian Pacific, said President and CEO Arne Sorenson.
“Showing great momentum, our worldwide RevPAR index increased 110 basis points in the quarter, the strongest single quarter performance since our acquisition of Starwood in late 2016,” Sorenson said.
The company’s development pipeline increased 3 percent in the second quarter, reaching a record 487,000 rooms, including around 213,000 rooms under construction, he said. Marriott, along with Hilton and IHG, dominated the U.S. construction pipeline in the second quarter, as they have for several years now.
“Our results in the second quarter highlight the resiliency of our business model and the growing strength of our brands,” Sorenson said. “Year-to-date through August 2, we have already returned $1.9 billion to shareholders. For full year 2019, we expect cash returned to shareholders through share repurchases and dividends could approach $3 billion.”