Hilton(HLT) - 2025 Q2 - Quarterly Results

Hilton Second Quarter 2025 Results Hilton reported strong Q2 2025 profit growth and record development, with a slight RevPAR decline Financial and Operational Highlights Hilton reported strong Q2 2025 financial results and record development, with a slight RevPAR decline Q2 2025 Key Financial Metrics | Metric | Value | | :--- | :--- | | Diluted EPS | $1.84 | | Diluted EPS, adjusted | $2.20 | | Net Income | $442 million | | Adjusted EBITDA | $1,008 million | - System-wide comparable RevPAR declined by 0.5% on a currency-neutral basis compared to Q2 2024[3] - The development pipeline reached a record 510,600 rooms as of June 30, 2025, a 4% increase year-over-year, with 36,200 new rooms approved in the quarter[3] - Net unit growth was 7.5% from June 30, 2024, with 22,600 net additional rooms in Q2 2025[3] - Returned $791 million to shareholders in Q2, comprising $755 million in share repurchases (3.2 million shares) and $36 million in dividends[3][13][14] CEO Overview and Performance Summary CEO Christopher J. Nassetta highlighted resilient bottom-line performance despite Q2 2025 RevPAR softness, anticipating future growth - The CEO expressed confidence in future RevPAR growth, citing expectations for better economic growth in the U.S. and low industry supply growth[5] RevPAR and Fee Revenue Growth | Period | System-wide Comparable RevPAR (vs. 2024) | Management & Franchise Fee Revenue (vs. 2024) | | :--- | :--- | :--- | | Q2 2025 | -0.5% | +7.9% | | YTD Q2 2025 | +1.0% | +6.6% | YTD 2025 Financial Performance vs. YTD 2024 | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Diluted EPS | $3.07 | $2.71 | | Diluted EPS, adjusted | $3.92 | $3.44 | | Net Income | $742 million | $690 million | | Adjusted EBITDA | $1,803 million | $1,667 million | Development and Pipeline Growth Hilton maintained strong Q2 2025 development, opening 26,100 rooms and expanding its record pipeline to 510,600 rooms - Notable Q2 openings include the Sax Paris (LXR), The Marcus Portrush (Tapestry Collection), and Hotel Astoria Vienna (Curio Collection) and the first LivSmart Studios by Hilton and the Waldorf Astoria New York opened in July[9] - The development pipeline reached a record 510,600 rooms across 3,636 hotels[10] - The pipeline includes expansion into 29 new countries and territories, with over half of the pipeline rooms located outside the U.S.[10] Balance Sheet and Liquidity Hilton maintained a strong balance sheet with $11.0 billion debt and robust liquidity, returning significant capital to shareholders - Total debt outstanding was $11.0 billion as of June 30, 2025, with no material maturities before April 2027[12] - In July 2025, issued $1.0 billion of 5.750% Senior Notes due 2033 and used proceeds to repay all $515 million outstanding on the Revolving Credit Facility[3][12] - Paid a quarterly cash dividend of $0.15 per share in June 2025, totaling $36 million, with another $0.15 dividend authorized for September 2025[13] - Repurchased 6.9 million shares for $1,718 million in the first six months of 2025, with total capital return year-to-date through July at $1,881 million[14] Company Outlook Hilton provides forward-looking guidance for Q3 and full year 2025, projecting RevPAR growth and financial performance Full Year 2025 Outlook Hilton projects full-year 2025 RevPAR growth of flat to 2.0%, with net income between $1,640 million and $1,682 million Full Year 2025 Guidance | Metric | Projected Range / Value | | :--- | :--- | | System-wide comparable RevPAR growth (currency neutral) | 0.0% to 2.0% | | Diluted EPS | $6.82 to $6.99 | | Diluted EPS, adjusted | $7.83 to $8.00 | | Net Income | $1,640 million to $1,682 million | | Adjusted EBITDA | $3,650 million to $3,710 million | | Capital Return | ~$3.3 billion | | Net Unit Growth | 6.0% to 7.0% | Third Quarter 2025 Outlook Hilton projects Q3 2025 RevPAR to be flat to modestly down, with net income between $453 million and $467 million Q3 2025 Guidance | Metric | Projected Range | | :--- | :--- | | System-wide comparable RevPAR growth (currency neutral) | Flat to modestly down | | Diluted EPS | $1.89 to $1.95 | | Diluted EPS, adjusted | $1.98 to $2.04 | | Net Income | $453 million to $467 million | | Adjusted EBITDA | $935 million to $955 million | Financial Statements and Schedules This section presents Hilton's condensed consolidated financial statements and key operating statistics for the period Condensed Consolidated Statements of Operations Hilton reported increased total revenues and net income for Q2 and the first six months of 2025 compared to the prior year Condensed Consolidated Statements of Operations (in millions, except per share amounts) | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :--- | :--- | | | 2025 | 2024 | 2025 | 2024 | | Total revenues | $3,137 | $2,951 | $5,832 | $5,524 | | Franchise and licensing fees | $745 | $689 | $1,370 | $1,260 | | Operating income | $778 | $725 | $1,314 | $1,258 | | Net income attributable to Hilton stockholders | $440 | $421 | $740 | $686 | | Diluted EPS | $1.84 | $1.67 | $3.07 | $2.71 | Hotel Operating Statistics Q2 2025 system-wide RevPAR declined 0.5% due to U.S. softness, offset by strong growth in Middle East & Africa and luxury brands Q2 2025 System-Wide Hotel Operating Statistics vs. Q2 2024 | Region / Brand | Occupancy Change | ADR Change | RevPAR Change | | :--- | :--- | :--- | :--- | | System-wide | (0.5) pts | +0.2% | (0.5)% | | U.S. | (1.0) pts | (0.2)% | (1.5)% | | Europe | +0.8 pts | +0.9% | +2.0% | | Middle East & Africa | +7.2 pts | (0.9)% | +10.3% | | Asia Pacific | (0.3) pts | +0.8% | +0.3% | | Waldorf Astoria | +4.5 pts | +1.3% | +8.8% | YTD 2025 System-Wide Hotel Operating Statistics vs. YTD 2024 | Region / Brand | Occupancy Change | ADR Change | RevPAR Change | | :--- | :--- | :--- | :--- | | System-wide | — pts | +1.0% | +1.0% | | U.S. | (0.3) pts | +0.7% | +0.2% | | Europe | +0.8 pts | +1.4% | +2.5% | | Middle East & Africa | +4.8 pts | +2.1% | +9.5% | | Asia Pacific | +0.3 pts | —% | +0.4% | | Waldorf Astoria | +4.6 pts | +4.3% | +12.3% | Property Summary As of June 30, 2025, Hilton's system comprised 8,807 properties and over 1.3 million rooms, primarily franchised in the U.S Total System Properties and Rooms as of June 30, 2025 | Category | Properties | Rooms | | :--- | :--- | :--- | | Managed | 850 | 258,183 | | Franchised / Licensed | 7,911 | 1,031,409 | | Ownership | 46 | 15,287 | | Total System | 8,807 | 1,304,879 | - The largest brands by room count are Hampton by Hilton (352,203 rooms), Hilton Hotels & Resorts (224,838 rooms), and Hilton Garden Inn (160,527 rooms)[36] Capital Expenditures and Contract Acquisition Costs Total capital expenditures increased in Q2 and the first six months of 2025, while contract acquisition costs remained stable Capital Expenditures and Contract Acquisition Costs (in millions) | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :--- | :--- | | | 2025 | 2024 | 2025 | 2024 | | Total capital expenditures | $43 | $38 | $83 | $72 | | Contract acquisition costs, net | $42 | $40 | $72 | $77 | | Total | $85 | $78 | $155 | $149 | Reconciliations of Non-GAAP Financial Measures This section provides reconciliations of non-GAAP financial measures, including Adjusted EBITDA and adjusted EPS, to their GAAP equivalents Reconciliation: Net Income and Diluted EPS, Adjusted for Special Items This section reconciles Q2 2025 GAAP net income and diluted EPS to adjusted non-GAAP figures by excluding special items Q2 2025 Reconciliation of Net Income and Diluted EPS (in millions, except per share) | Metric | As Reported (GAAP) | Adjustments | Adjusted (Non-GAAP) | | :--- | :--- | :--- | :--- | | Net income attributable to Hilton stockholders | $440 | $87 | $527 | | Diluted EPS | $1.84 | $0.36 | $2.20 | Reconciliation: Adjusted EBITDA and Adjusted EBITDA Margin This schedule reconciles Q2 2025 net income to Adjusted EBITDA, which increased to $1,008 million with an improved margin Reconciliation of Net Income to Adjusted EBITDA (in millions) | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :--- | :--- | | | 2025 | 2024 | 2025 | 2024 | | Net income | $442 | $422 | $742 | $690 | | Interest expense | $151 | $141 | $296 | $272 | | Income tax expense | $187 | $169 | $297 | $266 | | Depreciation and amortization | $43 | $34 | $84 | $70 | | Other adjustments | $185 | $151 | $364 | $369 | | Adjusted EBITDA | $1,008 | $917 | $1,803 | $1,667 | | Adjusted EBITDA margin | 75.2% | 72.2% | 74.6% | 71.4% | Reconciliation: Net Debt and Leverage Ratios This section calculates Net Debt, which increased to $10,574 million as of June 30, 2025, with a 3.0x TTM Net Debt to Adjusted EBITDA ratio Net Debt Calculation (in millions) | | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Long-term debt, including current maturities | $10,944 | $11,151 | | Less: Cash and cash equivalents | ($448) | ($1,376) | | Net debt | $10,574 | $9,860 | - The TTM Adjusted EBITDA as of June 30, 2025 was $3,565 million[49] - The Net Debt to TTM Adjusted EBITDA ratio was 3.0x as of June 30, 2025[49] Reconciliation: Outlook This section reconciles projected net income to Adjusted EBITDA and GAAP EPS to adjusted EPS for Q3 and full year 2025 outlook Full Year 2025 Outlook Reconciliation (Low Case, in millions) | Metric | Value | | :--- | :--- | | Net income | $1,640 | | Interest, Taxes, D&A, and other adjustments | $2,010 | | Adjusted EBITDA | $3,650 | Q3 2025 Outlook Reconciliation (Low Case, in millions) | Metric | Value | | :--- | :--- | | Net income | $453 | | Interest, Taxes, D&A, and other adjustments | $482 | | Adjusted EBITDA | $935 | Definitions This section provides definitions for key non-GAAP financial measures and operational metrics used in the report Definitions of Key Metrics This section defines key non-GAAP financial measures and operational metrics, including Adjusted EBITDA, Net Debt, and RevPAR - Adjusted EBITDA: Calculated as net income excluding interest, taxes, depreciation, amortization, and other specified items like asset disposition gains/losses, share-based compensation, and cost reimbursement effects[61] - Net Debt: Calculated as total long-term debt (including current maturities) less cash, cash equivalents, and restricted cash[66] - Comparable Hotels: Defined as hotels active for at least one full calendar year that have not undergone major changes (brand, ownership, large-scale projects) and as of June 30, 2025, 6,425 of the 8,702 hotels were classified as comparable[68] - RevPAR (Revenue per Available Room): A key performance indicator calculated by dividing hotel room revenue by the total number of room nights available and is considered a meaningful indicator correlated to both occupancy and ADR[71]