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Weak hotel bookings in US, China slowed Hilton in Q3

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Weak hotel bookings in US, China slowed Hilton in Q3

Hilton Worldwide Holdings Inc. tempered expectations for revenue growth in 2019 and 2020, citing weaker business and leisure transient travel in an uncertain global environment.

Across the company, revenue per available room grew by 40 basis points year over year in the third quarter, a figure that fell below company expectations because of weak bookings in the U.S. and Asia, President and CEO Christopher Nassetta said on an earnings conference call. While RevPAR from group bookings rose by more than 3%, transient revenue was flat.

Hilton expects RevPAR growth for the full year of about 1% in 2019, with growth falling at or below 1% in 2020. Still, Nassetta maintained that strong net growth in the number of the company's hotel units, of 6% to 7% in 2020, will support earnings.

Trade tensions and unrest in Hong Kong — where RevPAR declined 40% in the quarter — hurt Hilton's business in Asia and contributed to a quarterly decline in China overall of 5.6%. For the full year, Nassetta said the company expects a roughly 3% RevPAR decline in greater China, driven by a decline in Hong Kong of roughly 23% to 25%.

More broadly, "businesses don't like uncertainties when they're trying to make decisions on hiring more people, investing in plant equipment, technology, making bigger decisions that drive investment, that drive demand for hotel rooms," Nassetta said. "I think everybody's reading the papers, watching what's going on with Brexit, watching what's going on with the trade wars, not only in the U.S. and China but Korea and Japan, looking at broader economic issues, an election year coming up in the U.S. and an impeachment process going on."

Combined, "it's creating a level of uncertainties that I think has got people rattled," he said.

Even so, he maintained that the company's pipeline of rooms under construction is strong enough that "even in this environment, we will be able to deliver great bottom-line results."

Even with roughly flat RevPAR growth in the third quarter, Nassetta noted, the company still achieved year-over-year EBITDA growth of roughly 9%.