Hilton, Marriott cut forecast for key revenue measure

(Reuters) - Hilton Worldwide Holdings Inc HLT.N and smaller rival Marriott International Inc MAR.O lowered their full-year forecasts for a key revenue metric, underscoring the impact of political and economic uncertainties in markets outside the United States.

A Hilton employee pushes a luggage cart in front of the the New York Stock Exchange to celebrate of the company's IPO, December 13, 2013. REUTERS/Brendan McDermid

Shares of Hilton, owner of the Waldorf Astoria and Conrad hotel brands, fell as much as 3 percent on Wednesday.

Hotel operators and airlines around the world have been hit by uncertainty after Britain’s vote to leave the European Union and a number of deadly attacks in Europe this year.

Hilton, the world’s largest hotel operator by market value, cut its 2016 system-wide revenue per available room (RevPAR) for the second time.

The company said it now expects an increase of 2-4 percent for the metric on a comparable and currency-neutral basis, down from its previous forecast of 3-5 percent growth.

RevPAR is calculated by multiplying a hotel’s average daily room rate by its occupancy rate.

Hilton Chief Financial Officer Kevin Jacobs said “Brexit” and other recent events in Europe could increase the uncertainty and potentially hurt demand across the region.

Marriott, which is set to buy Sheraton hotels owner Starwood Hotels and Resorts Worldwide Inc HOT.N, also trimmed its forecast for standalone comparable system-wide RevPAR.

The company forecast a 3 percent increase for the metric in North America, down from its previous forecast of 3-5 percent.

Marriott, however, reported a higher-than-expected second-quarter profit, helped by an increase in room rates and occupancy in North America.

“While hotel performance reflected generally slower economic growth, leisure travel demand remained robust and group business performed well,” Marriott Chief Executive Arne Sorenson said on Wednesday.

Hilton reported second-quarter profit and revenue slightly below Wall Street estimates and said the planned spin-off of its real estate and timeshare businesses was on track to be completed by the end of the year.

Hilton, which gets more than three quarters of its revenue from the United States, said in February it would spin off most of its real estate assets into a real estate investment trust, after which the company would be separated into three independent, publicly traded companies.

Excluding items, the company earned 25 cents per share in the quarter ended June 30, 1 cent below the average analyst estimate, according to Thomson Reuters I/B/E/S.

Revenue rose 4.4 percent to $3.05 billion, missing analysts’ average estimate of $3.06 billion.

System-wide comparable RevPAR rose 2.9 percent on a currency-neutral basis at hotels open for at least a year.

Hilton’s average daily room rate rose 2.7 percent to $146.52 in the quarter, while occupancy inched up 0.1 percent to 78.9 percent.

Reporting by Shashwat Awasthi in Bengaluru, Additional reporting by Arunima Banerjee; Editing by Sriraj Kalluvila and Maju Samuel