Two of the hotel industry's largest hotel companies reported their fourth-quarter numbers on Thursday, and overall the news was positive as a pickup in both leisure and business travel helped boost profits. However, the stronger U.S. dollar could hurt the companies in 2015.
Earnings at Hilton more than doubled during the fourth quarter, thanks in part to a 7-percent drop in expenses. Revenue was $2.83 billion in the fourth quarter of 2014, an increase of 7 percent, which was better than expected.
For the fourth quarter, Hilton posted a 155-percent rise in profits to $158 million, up from $62 million a year earlier.
However, the rest of 2015 may not be as rosy. Hilton CFO Kevin Jacobs said it expects "recent sharp movements" of the dollar against the euro, Australian dollar and yen to hurt adjusted EBITDA by $35 million-$45 million.
Meanwhile, Marriott International's profits rose 30 percent in Q4. Earnings rose to $197 million from $151 million a year earlier. Revenue increased 11 percent to $3.56 billion, beating analysts’ forecasts.
“Expectations were mixed going into the fourth quarter, and there was a lot of concern about how Marriott would be affected by the strong U.S. dollar,” Nikhil Bhalla, a lodging analyst for FBR Capital Markets in Arlington, told The Washington Post. “But we saw very good results.”
“We saw growing leisure demand in Mexico and the Caribbean, and a resurgence of travel in Egypt,” said Laura E. Paugh, senior vice president of investor relations for Marriott. “Group business was up, but [individual] business was stronger.”
Revenue per available room climbed at both Marriott and Hilton, by 6.2 percent and 6.6 percent, respectively. “We continued to see strong and balanced growth in both transient and group demand,” Christopher Nassetta, president and CEO of Hilton. “This has provided the foundation for solid rate growth.”
REIT Host Hotels also reported fourth-quarter numbers. It said the strong U.S. dollar will cut its revenue growth by $30 million this year and reduce its earnings by $5 million.
Host owns 17 hotels in international markets, and 12 of its 97 U.S. hotels are in Greater Washington.
Host had $1.32 billion in fourth quarter revenue, down 0.8 percent from a year ago. The hotel owner's 2014 revenue was $5.2 billion, up 3.6 percent from 2013.