It is going to be a while before Hilton returns to last year’s performance levels.
Hilton had its strongest year on record during its centennial celebration in 2019, the company’s CEO Chris Nassetta said Tuesday during a Washington Post livestream. But the coronavirus pandemic forced the company to suspend operations at many of its hotels around the world and furlough a little more than 60 percent of its 430,000-person workforce. While there are very early signs part of Hilton’s portfolio is beginning to recover, Nassetta said it will take years and a new operational approach to return to its pre-coronavirus performance high.
“To get back to levels we saw in 2019, I think it takes three or four years,” he added. “It’s a health crisis, and we’re not through that by any means but maybe the epicenter. Then we’ll exit into an economic crisis.”
All of Hilton’s properties in China have reopened and now average in the 40 percent range for occupancy, up from a 9 percent low earlier this year. In the U.S., Hilton’s occupancy rate is averaging in the mid-20 percent range, and beach markets are expected to post strong occupancy figures over the upcoming Memorial Day holiday, Nassetta said. But it is still too early to say there is momentum in an overall hotel industry recovery.
While praising the U.S. federal government’s assistance to businesses through relief measures like the $2 trillion CARES Act, Nassetta said hotel owners and operators should still expect some form of a recession that will take time to get through. Around 15 percent, or as many as 900 hotels, of Hilton’s global portfolio is still temporarily shut down due to low occupancy rates not justifying sustained operations.
“Other than closing a hotel for the purpose of tearing it down or rebuilding it, we don’t close hotels. But we had to,” Nassetta said. “We will open when we believe, working with our partners, there is enough demand to justify opening the hotel where they can generate enough revenue and profitability to cover expenses.”
Ushering in a New Experience
Hilton’s returning guests should expect a different hotel experience, beginning with check-in. The company was already promoting heightened tech offerings like digital check-in and digital room keys through its Hilton Honors app before the pandemic. But the health crisis will accelerate a variety of planned operational changes, as social distancing and avoiding high-touch areas becomes a necessity in the early days of the industry recovery.
Hilton is partnering with RB, maker of Lysol, and consulting with the Mayo Clinic on its new standard of hotel cleanliness, Hilton CleanStay, Skift previously reported. While Hilton doesn’t expect to offer on-site coronavirus testing for employees, the company will conduct body temperature checks, provide and mandate the use of personal protective equipment like face masks and gloves in certain parts of the property, and rely on employees to self-report their health conditions.
“Through a mosaic of these things, we think we can keep them safe and our guests safe,” Nassetta said.
He also mentioned Tuesday how the Hilton Honors app will become a key component of the company’s health and safety measures going forward.
Guests will be able to use the app to select their room from a map of the hotel they’re checking into, receive a key, and proceed with a contactless point of entry for the duration of their stay. Within the guest room, Hilton’s Connected Room platform, first launched in 2017, will allow guests to avoid high-touch features like a television remote control – even though housekeeping staff will have a new focus on these areas under the CleanStay initiative.
Room temperature, lighting, and remote control features can all be adjusted through the Hilton Honors app, Nassetta said. Room service will follow a “knock and drop” policy, limiting interactions between guests and staff. Guests can even check out and order ground transportation from the hotel through the app.
“The core elements of our business, in the long-term, I don’t think any of that is going to change,” Nassetta said. “Certain mechanical elements of the experience are going to be digitized, but that was happening anyway. It’ll just happen faster.”