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Hilton Reopens Hotels in Mainland China, Demand Improves

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Hilton Worldwide Holdings Inc. (HLT - Free Report) recently reopened all of its hotels in the Chinese Mainland. The company announced that Hilton CleanStay initiative will ensure the safety and well-being of its guests and employees. The CleanStay program is expected to be launched in June 2020.

Christopher J. Nassetta, president and CEO of Hilton, said “We are confident that there are brighter days ahead, and we are eager to welcome guests with our signature Hilton hospitality once again - in China, and all around the world.” The company announced that it is witnessing gradual increase in demand across China. Hilton has 255 hotels in operation in the Greater China region and more than 500 hotels in the pipeline.

Shares of Hilton have fallen 39.2% in the past three months, compared with the industry’s decline of 39.7%.

Strategic Measures

Hilton has already taken certain strategic measures to protect business from this crisis scenario, which include suspension of dividend and stock buyback programs. Notably, the decision is in line with its motive to preserve cash and maintain ample liquidity to avoid a possible recession due to the coronavirus outbreak.

Moreover, in an effort to reduce costs, Hilton president and CEO, Nassetta decided to forgo his salary for the remaining 2020 while the company’s executive committee is ready to accept a 50% pay cut. The company also decided to furlough part of its corporate workforce. However, members who were not laid off can expect a pay cut of up to 20% during the crunch. The company has also withdrawn its guidance citing the uncertainty surrounding coronavirus-induced crisis.

Despite the virus triggering a catastrophe in terms of lives lost and financial impact, the company appears resilient enough to navigate through these uncertain times. We believe that it will continue to monitor the COVID-19 crisis and adjust its contingency plans in accordance to it.

Hilton, which shares space with Wyndham Hotels & Resorts, Inc. (WH - Free Report) , Hyatt Hotels Corp. (H - Free Report) and Marriott International, Inc. (MAR - Free Report) , has a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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