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Published on Wednesday, February 12, 2020

Hilton has closed 150 hotels in China






Hospitality group Hilton is bracing for a long impact on its business due to the coronavirus outbreak.


In an earnings call, CEO Chris Nassetta revealed 150 hotels in China have been forced to close.


That represents about 39,000 non-revenue generating rooms.


Although it is too early to say with certainty, it could affect the business for up to a year, based on past experience with the Sars epidemic.


"We've tried to estimate the potential impact on our business. Three to six months of escalation and impact from the outbreak, and then these things don't typically turn around overnight, so another three to six months of recovery," Nassetta said.


Although it will mostly affect China and elsewhere in Asia, it will also affect the US and other global markets with a downturn in outbound China travel.


Hilton expects the outbreak to cut $25 million to $50 million off the company's EBITDA for 2020.


Nassetta said the inbound China market currently accounts for about 2.7% of its EBITDA.


The China market had already been weak before the outbreak with revenue per available room down 7.7%.


This was due to a slowdown in leisure trips and impact from the Hong Kong pro-democracy protests.


 

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