The CEO of Hilton, Christopher Nassetta, said Tuesday that travelers seem to be in a “wait-and-see mode” as American travel demand has softened.
Hilton reported its revenue per available room grew 2.5% year-over-year, driven by solid performance in January and February.
“However, broader macro uncertainty intensified in March, which pressured demand particularly across leisure,” Nassetta said on the company’s first-quarter earnings call. “Weaker trends have continued into the second quarter, with short-term bookings roughly flat year-over-year.”
“We believe travelers are largely in a wait-and-see mode, as the rapidly-changing macro environment continues to unfold,” he added.
As a result, Hilton said it expected its second-quarter revenue per room to be approximately flat compared to the same quarter a year prior. The company also downgraded its guidance for the year and is now projecting revenue per available room growth of 0 to 2%. In February, they forecasted growth of 2 to 3%.
Travel has recently showed signs of slowing down after a post-pandemic boom, with softening US demand being felt across much of the industry as Americans pull back on travel amid broader economic uncertainty. Airlines have also reported weaker demand and as a result have cut summer flight schedules and adjusted their forecasts for the year.
Nassetta said market reactions and consumer sentiment show there’s a lot of economic uncertainty, but that he thinks there’s been an “overreaction” to the changes brought on by President Donald Trump’s administration.
“I think at the moment the risk in the marketplace is sort of weighted too heavily to the downside,” Nassetta told analysts on the call. “My own belief is you will see some of that, if not a lot of that, uncertainty wane over the next couple of quarters, and that will allow the underlying strength of the economy to shine through again.”
Travel industry experts previously told Business Insider that travelers were booking trips more last-minute, supporting the idea that they may be in “wait-and-see mode.”
Ali Furman, consumer markets industry leader at PwC, and Jonathan Kletzel, transportation and logistics leader at PwC, told Business Insider last month Americans were cutting back on travel and waiting until closer to their dates of travel to book flights, hotels, and rental cars.
“This moderation is different from the post-pandemic surge when consumers were willing to pay almost any price for a trip,” they said, adding that consumers are focused on getting the best value. “Now, financial pressures are causing them to think twice before booking.”
Do you have a story to share about booking your trips last-minute or being more strategic about booking travel? Contact this reporter at kvlamis@businessinsider.com.
