Hilton CEO: Our weekends are slammed with travelers

Hilton CEO Christopher Nassetta says the hotelier's recovery from the depths of the pandemic continues, with notable strength in demand by travelers on non-work days.

"The weekends are slammed everywhere," said Nassetta in an exclusive interview on Yahoo Finance Live. "The one area that continues to lag a little bit — which is probably not surprising — is the urban markets have been a little bit on lag for a whole bunch of reasons."

Hilton's rebound was on full display in the company's recent third-quarter earnings report. 

Revenue per available room — a key industry metric known as RevPar — surged 98.8% from a year ago. Occupancy levels improved sharply in all of Hilton's geographic regions and by major brand. Improvements in occupancy were led by the Americas geographically, and at Embassy Suites from a brand perspective.

Overall occupancy levels clocked in at 64.3% in the quarter, up from 42.8% a year earlier.

Nassetta struck a very bullish tone on the outlook for holiday travel after many people didn't have a holiday season in 2020.

"I think the holiday leisure season is going to be very, very strong just as the summer season was and for that matter, weekends," Nassetta added.

Hilton's stock has taken notice of the shift in tone around the business. Shares have shot up 12% in the past six months, outperforming the S&P 500's 10% gain.

The Street has taken notice, too.

"Despite 3Q21 results that were essentially "only" in line from a RevPAR/core fee standpoint and a conference call tone that, while optimistic, contained rather limited news in the way of incremental catalysts, the stock continues to push higher and reach new territory on the valuation front. We attribute this to the seemingly limitless power of the "thesis trade," whereby easy to understand (and thus easy to own) large cap stocks with exposure to discretionary spending continue to work, with a view towards valuation (in the historical context, anyway) that can probably best be described as "agnostic." That's not to take away from the many positives that an asset light, fee-centric, model offers investors; it's merely to note that current multiples are in uncharted waters," said Deutsche Bank analyst Carlo Santarelli in a research note to clients. 

Santarelli rates Hilton's stock at a Hold.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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