(Reuters) – Hilton Worldwide Holdings Inc (HLT.N) cut its full-year outlook for a key revenue measure on Wednesday, citing a slowing global economy which was weighing on spending plans of businesses, sending the U.S. hotel operator’s shares down as much as 2.8%.
The forecast comes a day after the International Monetary Fund lowered its estimate for global growth in 2019, as the U.S.-China trade spat and Brexit uncertainties are seen eroding business confidence and weakening investment spending.
The slowing growth is known to directly affect travel budgets of corporations.
“(People including corporate heads) are incrementally more cautious because of what’s going on in the broader (political) environment,” Chief Executive Chris Nassetta said on a post-earnings call with analysts.
Hilton, the owner of Waldorf Astoria and Conrad hotel chains, said it now expects global corporate profit growth to be positive but “incrementally” lower than its previous estimates, as international economies including China see a slowdown.
“China is clearly going to be worse in the second half of the year than the first,” Nassetta said.
China’s economic growth is expected to slow to a near 30-year low of 6.2% this year, according to a Reuters poll here amid a bruising trade war with the United States.
Hilton now expects full-year RevPAR – a key performance metric for the hotel industry – to increase between 1% and 2%, down from an earlier range of 1.0% to 3.0% rise.
The company’s quarterly profit, however, topped Wall Street estimates, helped by a steady demand for its rooms in the United States and the recently concluded Cricket World Cup that aided travel in Europe.
Hilton’s adjusted earnings for 2019 is expected to range between $3.78 and $3.85 per share, compared to its previous forecast of $3.74 to $3.84 per share.
Net income attributable to Hilton stockholders rose to $260 million, or 89 cents per share, in the second quarter ended June 30, from $217 million, or 71 cents per share, a year earlier.
On an adjusted basis, Hilton earned $1.06 per share in the quarter beating analysts’ average estimate of $1.02 per share, according to IBES data from Refinitiv.
Revenue rose 8.4% to $2.48 billion.
Up to Tuesday’s close, Hilton’s shares rose 32.5% this year, outperforming a 19.9% gain in the S&P 500 index .SPX.
Reporting by Ashwini Raj and Ankit Ajmera in Bengaluru; Editing by Shailesh Kuber