Hilton CEO Chris Nassetta is not overly concerned about the state of the U.S. economy, which is pegged by many analysts to be headed into a recession.
Speaking at the 2019 Skift Global Forum Wednesday in New York City, Nassetta argued that low unemployment rates and a strong housing market support the notion that customers are still willing and able to travel. The industry also remains in what he calls “the golden age of travel.”
“We are reasonably optimistic with how the economy is doing and feel it is in decent shape,” Nassetta told a room of travel professionals. “But it is hard to argue against the fact that we are in the latter stages of a prolonged cycle of growth.”
While the underpinnings of a strong economy remain intact for both consumers and the hospitality business, news reports of the U.S.’ ongoing trade war with China, the current election cycle, and political conflicts in the Middle East and Hong Kong have created excessive uncertainty in the market, Nassetta added.
Admittedly, this unrest has led to a lot of choppiness in occupancy for the hotel sector. These inconsistencies in business can occur over the course of a few weeks or months, but Hilton is confident they will subside across its brands.
Hilton’s revenue per available room (RevPAR) increased a modest 1.4 percent in the second quarter, as aforementioned U.S. trade tensions with China dampened corporate bookings in the U.S. and leisure travel in the Asia Pacific region.
“Businesses and consumers have their caution flags out, and to pull back based on what they are seeing is the natural reaction,” Nassetta said, adding that the Federal Reserve cutting rates by another quarter point Wednesday will have no impact on Hilton’s immediate business decisions.
The Next 100 years
Hilton is fresh off its 100th year anniversary in May. Over the past century, the company has served an estimated 3 billion customers and contributed more than $1 trillion to the world economy, according to Nassetta.
The hospitality giant is currently opening about two hotels per day, while continuing to invest in in-room technologies, such as digital key, select your own room, and app-enabled touch controls to adjust room lights and temperature. This week Hilton additionally announced a new partnership with iHeart Radio.
Hilton has also debuted three new brands (Motto by Hilton, LXR Hotels & Resorts, and Signia Hilton) in 2019, with at least two more scheduled down the line. None of those will be in the home rental space, however, according to Nassetta. Hilton contends it will not follow its rival Marriott International into that space because it is not something its customers are asking for.
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