U.S. business travel helped boost revenue at Hilton, but the hotel operator issued a weak outlook. Hyatt said international markets will be ''challenged.'' Fred Katayama reports.
More travelers paying higher rates for rooms drove revenue and profit sharply higher at HIlton Worldwide. Business travel spurred by the strong U.S. economy drove up occupancy at the owner of the DoubleTree, Waldorf Astoria and Conrad brands. The key metric - revenue per available room - rose 6.6 percent in the latest quarter. Hilton was able to boost room rates the most in the Americas. Hilton operates three-fourths of its hotels in the U.S. Hilton forecast profit that was weaker than expected for the current quarter, but it says it's optimistic about growth for this year. SunTrust Robinson Humphrey analyst Patrick Scholes said, "One reason why its (2015 outlook) is higher: they sold the Waldorf Astoria (in New York). They''ll reinvest the proceeds into hotels that will earn more money than the Waldorf did." Hilton's shares, which have far outperformed the broader market this year and over the last 12 months, lost ground in early trading. Rival Hyatt Hotels also managed to drive rates, occupancy and room revenue higher, but by much less. By selling real estate like the Hyatt Regency in Indianapolis, it was able to multiply profit, which beat analysts expectations. The operator of the Grand Hyatt and Park Hyatt said it sees continued strength in the U.S. but international markets will be "challenged." Hyatt's shares, which underperformed those of Hilton's this year and last, rose in early trading. Marriott reports its results after the markets close.