Hilton, the US-based hotels group, has warned it faces “a long journey” to recovery after reporting one of the worst quarters in its history as the pandemic pushed it to a steep loss.
The company reported on Thursday a $432m loss for the three months to end of June, down from a net income of $11m in the first quarter and a stark drop from a profit of $261m in the same period last year.
Revenues in the second quarter were $564m, down from $2.5bn in 2019, as the coronavirus pandemic pushed governments to close borders and prevent travel worldwide.
“Our second-quarter results reflect the challenges that our business has experienced as a result of the pandemic,” Chris Nassetta, Hilton’s chief executive, said in a statement. “While we have a long journey in front of us, we are on the road to recovery and look forward to the opportunities ahead.”
In June, Hilton announced that it was cutting roughly 2,100 jobs in anticipation of a long-term reduction in travel. It has also drawn down the entirety of a $1.75bn revolving credit facility, issued $1bn in senior notes and pre-sold $1bn worth of loyalty points to boost liquidity since the pandemic began.
Richard Clarke, an analyst at Bernstein, said it was “certain” that the second quarter of the year would “be the worst ever quarter in the history of the hotel sector” but that development of new hotels would likely be more resilient than after the 2008 financial crash.
IHG, which owns the Crowne Plaza and Holiday Inn brands and is due to report interim results next week, said in May that the pandemic was “the most significant challenge both IHG and our industry have ever faced”.
Hilton, which said it had $10.6bn in long-term debt outstanding at the end of the quarter, opened 60 new hotels between April and the end of June. It has also signed a licence agreement with Country Garden, an Asian hotel development group, to develop long-stay suites in China in a bid to take advantage of the growing middle class market there.
Across the hotel group’s estate, the recovery has been slowest in Europe where occupancy levels were 7 per cent in the quarter, compared with 24 per cent in the US and 29 per cent in Asia-Pacific.
A similar pattern was seen at Accor, Europe’s largest hotel group, which reported financial figures on Tuesday. Speaking to the Financial Times, Sébastien Bazin, Accor’s chief executive, said customers were mostly choosing to book coastal resort hotels and destinations they could drive to.
He described domestic travel markets as “the best buffer” for hotel operators while they waited for international travel to return to pre-coronavirus levels, and said people were tending to book with five days’ notice compared with 10 last year.