The president of global development for Hilton Hotels said the company is planning to expand in Canada, but Kevin Jacobs said he sees expansion globally as the pandemic shows signs of easing.
"Canada is important for Hilton because everywhere is important for Hilton. We want to be everywhere. We are in 119 countries, and we have another 35 new countries in our pipeline," Jacobs said at the 25th annual Canadian Hotel Investment Conference, held online this year.
During the keynote presentation, which was a conversation with Gilda Perez-Alvarado, global CEO of real estate firm JLL's hotels and hospitality group, the longtime Hilton executive hinted at more growth coming. The company also posted record occupancy in May driven by U.S. leisure travel.
"We've got some luxury opportunities in both Vancouver and Toronto I cannot announce or talk about because deals are not done," said Jacobs, who noted Hilton counts Canada as fifth in the world in terms of presence for the company, with 160 hotels and 26,000 rooms.
Hilton has 80 hotels with 10,000 rooms in the pipeline for Canada.
Jacobs, who joined Hilton in 2008 and has risen to chief financial officer in addition to his development role, said the COVID-19 pandemic has some similarities to the 2008 global financial crisis.
"There were a bunch of lessons learned," he said. In 2007, New York private equity giant Blackstone Group took Hilton private and thought it "could ultimately make it more valuable than it was in the public markets. It had all the pieces it needed to be great."
Blackstone's all-cash transaction was valued at about 26 billion U.S. dollars.
"Not long after that, the world blows completely sky high," said Jacobs, noting Hilton's leverage climbed. "But we knew the thesis would still work if we could make it through the financial crisis and remain calm."
He said everybody that was part of the deal knew the hotel sector was late in the cycle at the time, when he was treasurer at Hilton, but nobody could see the extent of the downturn coming.
"We didn't know the world would blow up as it did, just as we didn't envision COVID would do what it did to the world," said Jacobs. "But the upside was better than we thought" following the global financial crisis.
Perez-Alvarado asked Jacobs how the long-term strategies of Hilton have changed in the past year and was told not at all.
"If anything, it is has reinforced the strategy of the company," said Jacobs. "In the short term, your tactics are much different. Your revenue goes down 90% overnight, and you are in the middle of a health crisis. You think about protecting your customers, your team members, your owners."
He said long-term trends show a growing middle class, which is good for the hotel sector, and none of that changes because of COVID-19.
"The golden age of travel has not disappeared. It has just been interrupted," said Perez-Alvarado.
Jacobs said hotel recovery has been generally tied to infection rates and vaccinations.
"There is not a lot of cross-border travel going on," said Jacobs, but he noted in the United States, signs of recovery began emerging in March.
Jacobs said, systemwide, Hilton was running at 50% occupancy in March, 60% in April, and by Memorial Day weekend, the company saw 93% occupancy, which was its highest level ever.
"Obviously this is being led by leisure travel," said the executive, who expects business travel to return. "We are also running occupancies during the week that suggests it's not all leisure travel. We are running on the weekends [revenue per available room numbers] ahead of 2019."