- Oops!Something went wrong.Please try again later.
Hilton CFO & President Kevin Jacobs joins Yahoo Finance Live to discuss company earnings, Paris Hilton’s marketing campaign, the pent-up demand for travel, and the outlook for growth.
AKIKO FUJITA: Well, the travel boom is boosting Hilton's earnings as it blew past estimates in its latest quarter. The company raising its full year guidance to the quarter's strong results, coupled with its confidence in continued recovery throughout the year. For more on the road ahead for Hilton, let's bring in Kevin Jacobs, Hilton's CFO. We've also got Yahoo Finance's Brian Sozzi with me here at the desk.
It's good to talk to you today. Certainly a very strong quarter for you. We're seeing a big bump in the stock on the back of the numbers. It's an interesting time to look at the travel rebound because you've certainly seen the pent-up demand for the last few years, but it comes at the same time that a lot of consumers are kind of assessing their options with higher costs. Talk to me about how you've been seeing that balance play out.
KEVIN JACOBS: Yeah, first of all, thanks for having me. It's always great to be with you guys. And yeah, we did have an amazing quarter. And I think, look, the way-- right now, we're not seeing people balancing that with higher costs, right? I think people are used to paying higher prices for everything in their lives.
And you mentioned, Akiko, the pent-up demand for travel. We're really seeing that as people shift their spending, particularly the US consumer, but consumers all around the world, shift their spending from goods, you know, that they're buying a lot of, obviously, during lockdowns and the pandemic to services. There's a ton of pent-up demand for travel. And our consumer is a strong consumer, right? We tend to skew more towards the higher end consumer that is still very robust in terms of their spending. And they're spending it on travel. And so we're having a record summer.
BRIAN SOZZI: Kevin, is it fair to still be calling the demand you are seeing revenge travel?
KEVIN JACOBS: I don't think so. I mean, I think there's still a fair amount of that where people-- you've talked to anybody in your lives, right? I mean, on the personal side, on leisure travel, we all have things in our lives that sort of got delayed during COVID, whether it was a trip or a wedding or a social occasion. But we're seeing it in all segments, right? Our business transient, you know, RevPAR in June was above 2019 levels, for example. And that continues into July.
So we really see it. And then group where people maybe think there isn't a robust demand for meetings, right, we're seeing group in the second quarter recover to 85% of where it was in 2019. And we think by the end of the year, it'll be largely recovered. Our group position for the back half of the year is ahead of where it was in 2019, for example.
And so I don't know if it really was ever fair to call it revenge travel. I think the way to think about it is there's a lot of pent-up demand for travel. And there are a lot of factors, you know, including-- spending, Asia Pacific. For us, we're a global company, so Asia Pacific's behind. That'll be a tailwind for us. You've got an infrastructure spending that's coming down the line. And again, I mentioned the health of our consumers. So I think it's just fair to say that the demand environment for travel is just very robust right now.
BRIAN SOZZI: Kevin, I want to lock in on three brands in particular you talked about in the earnings release-- Embassy, Hilton Garden Inn, and Hampton. All three of those chains stood out to me because they had over 70% occupancy in the second quarter. What is it about those chains that is driving that strength?
KEVIN JACOBS: Well, I think, look, all of our brands are doing well, and occupancy is recovering across the board. I think if you're talking about those brands, you know, first of all, they have a lot of distribution. They're spread across the country. And they tend to cater to people that are seeking value at that end of the spectrum.
So I think that's part of their secret, is just they deliver a high value. But I mean, we mentioned some brands. And yeah, you can look at the occupancy numbers, and they may be a little bit different. But like I said, we're experiencing strong demand, really, across our brands, across our chain scales, and across geographies.
AKIKO FUJITA: You mentioned that, obviously, you raised your full year guidance. You said you're not necessarily seeing consumers look at this as a tradeoff between travel and then costs at home, partly because you do cater to the higher end. I'm wondering what you're seeing going into year end into travel around the holidays, for example. I know months ago, we were talking about people planning way ahead. What does that look like for you right now?
KEVIN JACOBS: Yeah, you know, booking windows are still pretty short, so it's really hard for me-- for us, really, to have a lot of visibility around the travel season. I think it will all come down to what's going on in the macro environment. We think, again, demand will be quite strong. We don't see any reason to believe that the travel season will be different. But we tend to, on the transient side, have sort of 30 to 45 days of visibility.
Even though you might think that-- I mean, for travel periods and for holidays, I would recommend people book in advance. But generally speaking, we don't really have that much visibility. But we do expect a strong balance of the year, which is why we had the confidence to raise our guidance.
BRIAN SOZZI: Kevin, I'll take one for the team here. How did you come about to develop this Paris Hilton marketing campaign? And how do you-- how will you measure success?
KEVIN JACOBS: Well, look, these are-- the second part's pretty easy. We have lots of ways to measure ROI in the marketing space. I mean, you know, I'm not a marketeer, but we do have a lot of smart people that measure success. And there's all kinds of ways you can measure engagement through social media channels, and ultimately, whether it turns into business.
And how we came across doing business with Paris, I mean, she's-- we've sort of always had somewhat of a relationship with her and her family. They're obviously a big part of our history. They're not directly involved in the business anymore. But Paris is great. I've spent some time with Paris as part of the work we've been doing with her lately. And she has a lot of pride in our business.
Obviously, she shares a name with us and a history. And so it's actually been a lot of fun. I think our marketing teams have had a lot of fun working together with her in its early days. But we've had some good receptions to her ads and-- that she's done with us. And hopefully, that will continue.
AKIKO FUJITA: I mean, it certainly got us talking, right?
BRIAN SOZZI: Got to get her on the earnings call next time, Kevin.
KEVIN JACOBS: Absolutely.
BRIAN SOZZI: Get her on the earnings call.
KEVIN JACOBS: Maybe that's the next step. We'll bring her into finance.
AKIKO FUJITA: Brian-- I'm gonna quote Brian Sozzi here.
KEVIN JACOBS: We'll get her on the finance IR team.
AKIKO FUJITA: He said, "Embrace the history." And as you said, certainly they're not part of the business now, but it got a lot of people talking, talking about the Hilton brand.
KEVIN JACOBS: Listen, she's very talented. She's an amazing marketer, and she moves the needle. So our social engagement and the things we've done with her and her husband, Carter, across their honeymoon were really some of the best social engagement we've ever seen.
AKIKO FUJITA: Kevin Jacobs, Hilton CFO, really appreciate you joining us today. And our thanks to Brian Sozzi as well for joining in on the conversation.