(Reuters) - Hotel operator Hilton Worldwide Holdings Inc MLT.N reported fourth-quarter profit and revenue above Wall Street estimates, powered by rising demand for rooms in China as travel picks up pace in the world’s second largest economy.
Shares of Hilton, owner of the hotel chain Waldorf Astoria, rose as much as 4 percent to $86.51 on Wednesday.
The hotel operator said it recorded the strongest growth in international business, which accounts for less than 25 percent of its overall revenue, from the Asia-Pacific region.
Revenue per available room (RevPAR) from the region, a key performance metric for the hotel industry, rose 7.6 percent as the company benefited from addition of more hotels in China.
The rise in Asia Pacific RevPAR was led by China where it grew 9 percent, Hilton’s Chief Financial Officer Kevin Jacobs said on a conference call.
The hotel operator said it expects higher occupancy rate in China as demand from individual travellers as well as corporate groups continues to improve in 2018.
Larger rival Marriott International Inc (MAR.O) also reported strong RevPAR growth in international markets led by China on Wednesday.
Marriott, which has a higher exposure to international markets than Hilton, said its revenue per available room in China grew 9.1 percent in the fourth quarter ended Dec. 31.
Export recovery has helped China post its first annual rise in growth in seven years with the country's economy growing faster than expected in the fourth quarter of 2017. (reut.rs/2C036PZ)
Baird analyst Michael Bellisario said China is getting to that “golden age of travel,” where its growing middle class is boosting increased demand for inbound and outbound travel.
SunTrust analyst Patrick Scholes said Beijing’s “Belt and Road” initiative, a project aiming to build a modern-day ‘Silk Road’ could also be helping hotel demand.
Hilton’s overall revenue per available room rose 3.8 percent in the quarter, while Marriott’s climbed 4.6 percent, as more people booked rooms at higher prices, helping the hotel operators reaffirm their 2018 RevPAR growth forecast of between 1 percent and 3 percent.
Hilton’s total revenue surged 24 percent to $2.28 billion, beating analysts’ estimates of $2.24 billion, according to Thomson Reuters I/B/E/S.
Excluding one-time items, Hilton earned 54 cents in the quarter, beating analysts estimates of 45 cents. The company forecast adjusted earnings per share of $2.49 and $2.60 for 2018.
Reporting by Sanjana Shivdas and Arunima Banerjee in Bengaluru; Editing by Savio D'Souza and Arun Koyyur