Hilton CEO Sees Optimism Lifting Business Travel in 2017

Hilton CEO Christopher Nassetta thinks 2017 could, potentially, be a good year for corporate business travel, perhaps owing to the so-called “Trump Bump” or “Trump Effect” that’s being noted by some industry watchers and downplayed by others.

Speaking to CNBC from the World Economic Forum in Davos, Switzerland, Nassetta said he has “optimism going into this year,” given that Hilton just completed the spinoffs of its timeshare and real estate investment trust earlier this month, and that early signs point to more U.S. corporations increasing their business travel in 2017.

“Broadly, in American CEOs, there’s a more optimistic view,” Nassetta said. “We do see the early telltale signs that corporate America is becoming more optimistic and they’re starting to make decisions to spend more money as a consequence of that optimism.”

“The psychology is positive,” Nassetta noted. “What we saw last year in our business, real time, was corporate America was very nervous for a whole bunch of reasons. You know, what was going on in the election, what was going on with terrorism around the world and they stopped traveling … The corporate business really got quite weak. It’s coming back, it’s coming back a little bit. It’s still really early days.”

Speaking separately to Bloomberg, also at Davos, Nassetta said, “We’ve certainly seen some good telltale signs that the corporate business is starting to turn around.”

A recent report from the U.S. Travel Association and Oxford Economics, showed the possibility of a post-vote “Trump Bump” that may have boosted U.S. business travel numbers in the month of November.

“You’re going to see optimism build a bit, you’re going to see capital spending go up, you’re going to see employment go up with that, and when you see those things happening, demand in hotel rooms go up,” Nassetta added, after noting that reforms in corporate taxes, regulations, and some talk of infrastructure spend from the incoming administration and Congress.

Nassetta also noted that 75 percent of Hilton’s core business came from business travel, much of its domestic. During the company’s 2016 third quarter earnings call in October, Nassetta said “corporate transient was softer than expected, particularly in September.”

When asked whether President-Elect Trump’s statements regarding trade and protectionism were of concern, Nassetta said, “I think it’s a bit of an opening salvo.” He added, “My own belief is that as things settle down it’s not going to be as bad as people think. I think they’re [Trump and his incoming administration] saying that they want more balance to trade.”

While Nassetta does detect signs of optimism from American CEOs regarding the economy and the new Presidency, he also ultimately added, “If you look at the U.S. economy, it’s too early to judge how this will all play out.”

Nassetta’s remarks are a contrast to those given by his peer, Marriott CEO Arne Sorenson. In an earlier interview with CNBC, Sorenson said the following about a possible “Trump Bump”:

“I think we would say that [a Trump effect] is not proven yet,” Sorenson said. “We continue to see an economy that’s growing, [in] the U.S. in particularly, albeit at a fairly modest rate. Maybe there are some glimmers of hope, but I think those glimmers aren’t clear enough to overcome your bias. So if you want to come at it and say ‘I believe it’s happening’ you might find a little evidence. But I don’t think the evidence is very powerful yet.”

Sorenson also expressed more concern about Trump’s more protectionist and xenophobic policies having a detrimental impact on the travel business overall.